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On Monday, Piper Sandler analysts shifted their stance on Aon Corp (NYSE:AON), upgrading the stock from Neutral to Overweight. The move comes despite a reduction in the price target to $378.00 from the previous $384.00. According to InvestingPro data, AON’s current market capitalization stands at $72.5 billion, with the stock trading near its Fair Value based on comprehensive analysis. The upgrade was prompted by Aon’s recent performance, which saw its shares fall significantly after a disappointing quarter. Piper Sandler believes the decline was steeper than justified.
The brokerage firm acknowledged the broader trend of slowing organic growth within the brokerage sector. However, they expect the market’s expectations for Aon to lower, which could present an opportunity for the company. According to Piper Sandler, Aon’s management is optimistic about operational improvements in the latter half of 2025, which supports the upgrade.
Piper Sandler also pointed to Aon’s defensive business nature as a factor in their upgraded rating. The firm’s analysts see resilience in Aon’s business model despite the slowing growth in the industry. This defensive positioning is supported by AON’s impressive 46-year streak of maintaining dividend payments, with a 21.14% dividend growth in the last twelve months. InvestingPro subscribers have access to over 10 additional exclusive insights about AON’s financial health and growth prospects. This defensiveness is viewed as a positive attribute, especially in uncertain market conditions.
Furthermore, Piper Sandler highlighted the potential impact of Aon’s upcoming analyst day. They anticipate that this event could serve as a catalyst for the stock, given the management team’s proficiency in presenting the company’s strengths and strategies to analysts and investors. With AON’s next earnings report due in 88 days, investors can access comprehensive analysis and Fair Value estimates through the detailed Pro Research Report available exclusively on InvestingPro.
In summary, Piper Sandler’s revised outlook for Aon is based on a combination of factors, including the company’s expected performance improvement, its defensive business nature, and the potential upside from its forthcoming analyst day. Despite the lowered price target, the firm’s analysts see more upside potential than downside risks for Aon stock.
In other recent news, Aon plc reported first-quarter earnings that did not meet analyst expectations. The company posted adjusted earnings per share of $5.67, falling short of the consensus estimate of $6.03. Revenue for the quarter was $4.73 billion, which also missed analyst projections of $4.84 billion. Despite these misses, Aon achieved a 16% year-over-year revenue growth, with organic revenue increasing by 5%. The company reaffirmed its 2025 guidance, indicating plans for mid-single-digit or greater organic revenue growth and double-digit free cash flow growth. Aon also reported a 12% growth in adjusted operating income for the quarter. The company announced a 10% increase to its quarterly dividend, marking the 15th consecutive year of dividend growth. Additionally, Aon highlighted its ongoing efforts in capital return to shareholders, which included $397 million through dividends and share repurchases.
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