Marsh & McLennan (MMC) PT Raised to $73 at UBS

UBS analyst Brian Meredith reiterated a Buy rating and raised his price target on Marsh & McLennan (NYSE: MMC) to $73.00 (from $64.00), calling it a strong earnings grower in a low growth environment.

Meredith commented, "If long-term organic growth were to fall to 2% it could pressure margins, but organic growth is holding up closer to 3% despite weak economic growth and a competitive insurance pricing environment. With MMC’s cost-controlling, we believe that it can continue to expand margins. In RIS, MMC’s underlying expense growth has averaged just +0.5% over the last three years, building in a buffer to support stable to expanding margins even in a low growth environment.

The analyst said free cash flow growth should support buybacks, allowing 13% EPS growth. "With moderate reductions in pension contributions and growing earnings, we expect FCF to grow to $4.20 per share in 2017. We expect this strong FCF to support share buybacks of $1.1 billion or more in each of the next three years, leading to 2-3% annualized reductions in the share count and allowing MMC to achieve its goal of 13% annualized EPS growth. With an average free cash flow yield of 5.0% over the last five years, our 2017 FCF estimate implies upside to $84 for the shares by year-end 2017."

The firm is increasing 2016/17 EPS estimates to $3.45 and $3.90 from $3.40 and $3.85, respectively,

For an analyst ratings summary and ratings history on Marsh & McLennan click here. For more ratings news on Marsh & McLennan click here.

Shares of Marsh & McLennan closed at $66.30 yesterday.

You May Also Be Interested In

• BOK Financial (BOKF) PT Raised to $97 at DA Davidson
• Weatherford International plc (WFRD) PT Raised to $184 at Piper Sandler
• Lithia Motors (LAD) PT Lowered to $310 at Craig-Hallum