On Thursday, Citi increased its price target on shares of Brown & Brown (NYSE: BRO) to $100 from $94, while keeping a Buy rating on the stock. Management at Brown & Brown emphasized the company's diverse portfolio, especially in Programs/Wholesale operations and its competitive edge in handling large accounts with agility and creativity. According to the analysts, 2024 is anticipated to be another strong year for growth, although the rate of industry growth is expected to slow down due to decreasing inflation and a potential dip in excess and surplus (E&S) property pricing. However, there is still optimism for continued growth in E&S casualty pricing.
Brown & Brown's management noted a change in the merger and acquisition (M&A) landscape, with fewer bidders involved in deals compared to the period before interest rate hikes. Nonetheless, high valuations persist, bolstered by the availability of committed funds. The company's stock performance has been notable, with a year-to-date increase of 23%, second only to RYAN within Citi's broker coverage.
The firm also highlighted Brown & Brown's recent sale of a 49% interest in one of its captive entities as a slight positive. This move aligns with the company's strategy to harness near-term organic growth coupled with M&A opportunities. The analysts at Citi project that these factors will continue to contribute to the stock's potential upside in the market.
InvestingPro Insights
Following the update from Citi, a closer look at Brown & Brown through InvestingPro reveals a mixture of financial solidity and market performance. The company's commitment to shareholder returns is evident, with a track record of raising its dividend for 31 consecutive years and maintaining dividend payments for 39 years. This consistency is reflected in the recent 13.04% dividend growth over the last twelve months as of Q1 2024, showcasing a stable fiscal policy.
InvestingPro data also indicates a robust financial position for Brown & Brown, with a market capitalization of $25.03 billion and a P/E ratio of 26.92, which adjusts to 29.91 when considering near-term earnings growth. Additionally, the company's revenue growth of 14.96% over the last twelve months as of Q1 2024 suggests that its diverse portfolio is yielding tangible results. InvestingPro Tips highlight that Brown & Brown is trading at a low P/E ratio relative to near-term earnings growth, which may appeal to value investors looking for growth potential at a reasonable price.
For those interested in further analysis and additional InvestingPro Tips for Brown & Brown, they can explore the full suite of insights available on InvestingPro. There are 9 more tips to discover that could provide a more comprehensive understanding of the company's financial health and market position. To access these insights, readers can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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