On Wednesday, RBC Capital Markets adjusted its outlook on shares of Brown & Brown, Inc. (NYSE:BRO), a prominent insurance brokerage firm, by increasing the price target to $110 from the previous $95, while maintaining an Outperform rating on the company's shares. The revision reflects the firm's recognition of Brown & Brown's robust performance in the second quarter.
The company reported a notable organic growth of 10% in this quarter, a rate that stands out compared to its larger brokerage peers. The Programs and Wholesale Brokerage divisions were highlighted as the primary drivers of this growth, each achieving double-digit increases. RBC Capital emphasized that Brown & Brown's new business growth momentum continues to be strong across the entire organization.
Brown & Brown's impressive growth was not limited to revenue; the second quarter also saw a significant improvement in profitability. The company's EBITDAC (Earnings Before Interest, Taxes, Depreciation, Amortization, and Changes in accounting estimates) margins increased by 150 basis points year-over-year, underscoring efficient operations and effective cost management.
In addition to organic growth, Brown & Brown has been active on the acquisition front. The company completed 10 small bolt-on acquisitions during the second quarter. RBC Capital anticipates that Brown & Brown will continue its mergers and acquisitions strategy actively through 2025, further expanding its market presence and capabilities.
RBC Capital's positive outlook on Brown & Brown's shares is backed by the firm's consistent performance and strategic growth initiatives. The price target increase to $110 reflects confidence in the company's ability to maintain its growth trajectory and deliver value to its shareholders.
In other recent news, Brown & Brown Inc ., a premier insurance brokerage firm, posted strong financial results for the second quarter. The company's revenue saw a considerable rise, reaching nearly $1.2 billion, a 12.5% increase from the previous year.
Adjusted earnings per share also took an upward trajectory, marking a 17.7% increase to $0.93. These results were bolstered by the completion of 10 acquisitions during the quarter, which contributed around $13 million in annual revenues.
CEO Powell Brown expressed a positive outlook for growth opportunities, particularly in the UK market. He also mentioned the issuance of $400 million in 10-year senior notes, with the proceeds used for debt repayment and other purposes. The company's strong cash generation, over $370 million in the first half of the year, was also highlighted.
The firm's recent acquisitions, such as Kentro Nexus, have strengthened their program business in the UK, opening up organic growth opportunities considered on par with those in the US. Despite potential downward pressure on property market pricing, Brown & Brown remains optimistic about its prospects and opportunities, both domestically and in the UK market.
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