Goldman Sachs Reiterates Sell Rating on Marsh & McLennan (MMC)
Goldman Sachs analyst Robert Cox reiterated a Sell rating and $220.00 price target on Marsh & McLennan (NYSE: MMC).
The analyst comments "Following MMC's 3Q24 results we increase our EPS estimates by ~0.5% in 2025-2026, which remain 3% below Visible Alpha Consensus Data. The primary changes to our model are ~30bps stronger adj. operating margins, partially offset by modestly lower organic growth and a 50bps higher effective tax rate (26.5%). While we believe MMC is well positioned to execute on stated FY24 guidance of mid-single-digit organic growth, margin expansion, and strong growth in adjusted EPS, we remain of the view that VA Consensus estimates are too optimistic with respect to tough organic/margin comparisons. Our organic growth estimates call for continued modest deceleration into 1H25 with our slightly lower revisions reflective of incremental near-term pressure in discretionary consulting (Oliver Wyman/Career). As for margins, despite increasing our RIS core margin expansion (excluding restructuring and investment income) to 50bps (30bps prev., GSe 50bps in 3Q24) through 2026, we remain 60bps below VA Consensus as we consider the forward curve's impact on fiduciary investment income and a decelerating benefit from MMC's announced restructuring program (30bps 2025 benefit). Additionally, given MMC's guidance for a 26.5% adj. effective tax rate (excl discrete items) in 2024 which was revised upwards from 25.5% - 26.5% entering the year, we believe this higher rate may be more reflective of MMC's go-forward normalized tax rate given pressure from the geographical distribution of income combined with higher international tax rates."
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Shares of Marsh & McLennan closed at $226.92 yesterday.