On Friday, CFRA upgraded shares of Willis Towers Watson (NASDAQ:WTW) from Hold to Buy, setting a new price target of $315, an increase from the previous target of $275.
The upgrade follows the company's second-quarter earnings report, which exceeded analyst expectations with earnings per share (EPS) of $2.55 compared to the anticipated $2.35 and against the $2.32 consensus estimate. The reported quarter also saw revenues rise by 5%, aligning with the forecasted growth range of 4%-7%.
The adjusted EPS estimate for 2024 has been increased by $0.30 to $16.50 after the company demonstrated a notable 240 basis point expansion in operating margins, reaching 17%. The improved margins are attributed to the company's successful restructuring efforts and upwardly revised guidance. This positive momentum comes despite the company's previously failed merger with Aon plc (NYSE:AON), which had positioned Willis Towers Watson at a strategic disadvantage.
CFRA's revised 12-month target price is based on a valuation of 15 times the newly initiated 2026 adjusted EPS estimate of $20.95 and 17 times the 2025 EPS estimate of $18.45, which was raised by $0.55. These estimates compare to a three-year average forward multiple of 16 times and a peer average of 22 times. The firm expects Willis Towers Watson to achieve a revenue growth of 4%-7% and adjusted operating margins between 23.0%-23.5%.
The analyst also noted an increase in the company's estimated annual cost savings, now projected at $450 million, up from the previous estimate of $425 million. This improvement in cost savings and operational performance is expected to act as a catalyst for the stock, potentially allowing it to narrow its valuation gap with its industry peers.
In other recent news, Willis Towers Watson has seen significant developments. The company reported strong Q2 earnings, with an adjusted EPS of $2.55, surpassing both consensus and analyst expectations. Moreover, Willis Towers Watson has revised its financial outlook upwards and increased its target for annual cost savings.
Several analyst firms have updated their stance on Willis Towers Watson. Roth/MKM reiterated a Buy rating and increased the price target to $315, while Evercore ISI raised its price target to $319. TD Cowen also maintained a Buy rating with a price target of $329.00, following a conversation with the company's CFO, Andrew Krasner, who expressed confidence in achieving the 2024 guidance.
BofA Securities upgraded its stance on Willis Towers Watson, moving from Underperform to Neutral, citing operational improvements.
In other developments, Willis Towers Watson announced a unique partnership with Ukrainian insurer VUSO, aiming to cover cargo and war-on-land risks in Ukraine. These are just a few of the recent developments surrounding Willis Towers Watson. As these events unfold, they provide valuable insights for investors keeping an eye on the company.
InvestingPro Insights
As Willis Towers Watson (NASDAQ:WTW) garners a favorable upgrade from CFRA, the company's financial health and investor sentiment can be further illuminated by insights from InvestingPro. With a robust market capitalization of $28.42B, WTW demonstrates substantial size and stability in the sector. Investors should note that WTW has maintained dividend payments for an impressive 22 consecutive years and is currently trading near its 52-week high, reflecting strong market confidence. Moreover, WTW's revenue growth over the last twelve months as of Q2 2024 stands at 6.7%, showcasing consistent top-line expansion.
For those considering a deeper dive into Willis Towers Watson's stock, InvestingPro offers valuable metrics such as a P/E ratio of 26.59 and a forward-looking PEG ratio of 4.97, which may suggest the stock's price is high relative to near-term earnings growth. Moreover, InvestingPro provides an array of additional tips for WTW, including the noteworthy fact that analysts predict the company will remain profitable this year and that it has been profitable over the last twelve months.
To explore these insights in more detail and access further InvestingPro Tips for WTW, visit https://www.investing.com/pro/WTW. Investors can also take advantage of a special offer using the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, unlocking even more in-depth analysis and tips—currently numbering over six additional tips for WTW on InvestingPro.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.