On Wednesday, RBC (TSX:RY) Capital Markets raised its rating on shares of Marsh & McLennan (NYSE:MMC) from Sector Perform to Outperform, while also increasing the price target to $250 from the previous $242. The upgrade reflects a positive outlook on the insurance brokerage firm's prospects as the market heads into 2025.
Marsh & McLennan is recognized by the analyst at RBC Capital as a high-quality insurance broker that exhibits strong potential for both top and bottom-line growth. The diversified business mix is seen as an advantage, making the company less vulnerable to fluctuations in property and casualty (P&C) pricing as the market cycle progresses.
The recent McGriff acquisition is anticipated to bolster Marsh & McLennan's presence in the middle market. This strategic move is part of the company's broader efforts to expand its market share and enhance its service offerings.
Over the years, Marsh & McLennan has demonstrated a consistent improvement in margins. The analyst notes that there is additional potential for margin expansion moving forward, which could contribute to further financial growth for the company.
Finally, the valuation of Marsh & McLennan is deemed attractive by RBC Capital, especially when compared to some of its peers. The company's current market price is seen as discounted, which suggests an opportunity for investors considering the firm's growth expectations and market position.
In other recent news, Marsh & McLennan has made significant strides with a series of noteworthy developments. The company reported a 5% increase in underlying revenue and a 12% rise in adjusted operating income for Q3 2024, along with an adjusted EPS of $1.63 and consolidated revenue of $5.7 billion. In a major expansion move, Marsh & McLennan completed the $7.75 billion acquisition of McGriff Insurance Services, which is expected to contribute approximately $1.3 billion in revenues and $400 million to $500 million in EBITDA to Marsh & McLennan Agency LLC (MMA).
Evercore ISI resumed coverage of Marsh & McLennan, assigning an Outperform rating and setting a price target of $242. The firm's revised EPS estimates for Marsh & McLennan now exclude mergers and acquisitions intangible amortization and the net benefit credit. Analyst firms, including Keefe, Bruyette & Woods, BMO (TSX:BMO) Capital Markets, RBC Capital, and Goldman Sachs (NYSE:GS), have updated their price targets and ratings for Marsh McLennan (NYSE:MMC), reflecting their analysis of the company's recent performance and future prospects.
Furthermore, Marsh & McLennan issued $7.25 billion in senior notes. These notes were issued under the company's existing shelf registration statement and were offered via a prospectus. This issuance was facilitated by a group of major underwriters, including Citigroup (NYSE:C) Global Markets Inc., BofA Securities, Inc., and Deutsche Bank (ETR:DBKGn) Securities Inc. These are among the recent developments for Marsh McLennan.
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