CFRA Upgrades Willis Towers Watson (WTW) to Buy
CFRA analyst Catherine Seifert upgraded Willis Towers Watson (NASDAQ: WTW) from Hold to Buy with a price target of $315.00 (from $275.00).
The analyst comments "We lift our 12-month target price by $40 to $315, valuing the shares at 15x our newly initiated 2026 adjusted EPS estimate of $20.95 and at 17x our 2025 EPS estimate of $18.45 (upped by $0.55) vs. the three-year average forward multiple of 16x and a peer average of 22x. We raise our 2024 EPS estimate by $0.30 to $16.50 after WTW posted Q2 EPS of $2.55 vs. $2.05, beating our $2.35 EPS estimate and the $2.32 consensus view on 5% higher revenues (in line with our 4%-7% growth forecast). There was also a 240-bp expansion in operating margins to 17% as WTW is getting traction in its restructuring and guiding estimates higher. This follows its failed merger with Aon plc (AON 299 ***), which left WTW at a strategic disadvantage. We expect WTW to produce revenue growth of 4%-7% and adjusted operating margins of 23.0%-23.5% on an upwardly revised estimate of annual cost savings of $450M (from $425M). We think these improved metrics will provide the shares with a catalyst to close their valuation gap with peers."
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Shares of Willis Towers Watson closed at $277.60 yesterday.