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BMO Capital Markets analyst Michael Zaremski upgraded Willis Towers Watson PLC (NASDAQ:WTW) to Market Perform from Underperform and maintained the target price at $298.
Last week, the company reported Q4 adjusted EPS of $7.44, beating the consensus of $7.05, and sales of $2.91 billion, slightly missing the street view of $2.92 billion.
The analyst estimates Willis Towers’ recent two-quarters of organic growth margin upside surprise within its Risk & Broking segment to continue beating the consensus through the first half of FY24.
Zaremski estimates that it implies that near-term broking segment organic growth, which averaged ~10%, will likely remain 1.5x that of peers.
The analyst says Willis is meaningfully overweight vs. peers in its market-leading defined benefit (DB) plan administration business.
In the long term, Zaremski says that the company’s business will likely exhibit a low-to-no growth profile.
Willis faces a shrinking market for its defined benefit plans due to higher interest rates but sees a rise in “buy-out/in” activity as companies take advantage of increased pension funding rates and de-risk their plans, writes the analyst.
Zaremski estimates adjusted EPS of $16.87 in FY24 and $20.39 (prior $19.73) in FY25.
Price Action: WTW shares are trading lower by 0.01% at $271.84 on the last check Monday.
Posted In: WTW
