Deutsche Bank Downgrades Towers Watson (TW) to Hold

Deutsche Bank downgraded Towers Watson (NASDAQ: TW) from Buy to Hold with a price target of $135.00 (from $140.00). The downgrade follows news it plans to merger with Willis Group (NYSE: WSH). Analyst Paul Ginocchio thinks this changes the thesis from healthcare exchange adoption to the Willis turnaround.

"We remain bullish on healthcare exchanges, but the impact of TW’s healthcare exchange on the future combined companies share price goes from approx. 30% to around 15%. We also think the TW stock thesis changes from healthcare exchange adoption to the Willis turnaround, which may create churn in the TW shareholder base. While we do not see a lot of downside in TW’s shares, we also don’t see much upside near term. NewCo is trading on 13.5x cal’16E PE (clean EPS ex acquisition amort) vs AON at 14.7x and MMC at 16.0x. We now see TW as nearly fairly valued, thus downgrade to Hold," said Ginocchio.

For an analyst ratings summary and ratings history on Towers Watson click here. For more ratings news on Towers Watson click here.

Shares of Towers Watson closed at $125.80 yesterday.

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