On Thursday, BofA Securities updated its outlook on Marsh & McLennan shares (NYSE:MMC), raising the price target to $272 from the previous $255. The firm maintained a Neutral rating on the insurance broker and professional services company's stock.
The revision in the price target by BofA Securities follows the integration of second-quarter 2024 results into their forecast. Despite a slight decrease in earnings per share (EPS) forecasts due to lower fiduciary income, this was balanced out by stronger organic growth in the Retirement and Investment Solutions (RIS) business, particularly in the North American market. The company has maintained solid revenue growth of 7.84% over the last twelve months.
The new price objective of $272 reflects an increase from the prior target of $255. This adjustment is attributed to a multiple expansion, which now equates to 120% of the projected year-ahead S&P 500 price-to-earnings (P/E) multiple of 19.8x, up from the previous 19.2x, based on BofA's 2027 EPS forecast for Marsh & McLennan.
BofA Securities believes that the current valuation of Marsh & McLennan moderately captures the company's forward growth outlook. This assessment supports their decision to maintain a Neutral rating on the stock. The firm's stance indicates a view that the stock is fairly valued at present, considering the anticipated business performance and market conditions.
In other recent news, Marsh McLennan has announced notable earnings and revenue figures for the fourth quarter that exceeded analyst expectations. The firm reported an adjusted earnings per share of $1.87, surpassing the consensus estimate of $1.77. Revenue also saw an increase, rising 9% year-over-year to $6.07 billion, which was ahead of analysts' projections of $5.93 billion.
For the full year of 2024, Marsh McLennan's revenue was $24.5 billion, marking an 8% increase compared to the previous year. The company's Risk & Insurance Services segment saw an 11% revenue increase to $3.6 billion in Q4, while Consulting revenue rose by 6% to $2.4 billion.
In addition to these financial developments, Marsh McLennan completed a significant merger, acquiring McGriff Insurance Services for $7.75 billion in November. According to President and CEO John Doyle, this acquisition positions Marsh McLennan favorably for 2025. These are among the recent developments for the company.
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