On Wednesday, Citi updated its financial outlook for Ryan Specialty Group (NYSE: RYAN), raising the stock price target to $52 from the previous $49 while maintaining a Neutral rating on the stock. The adjustment comes after the company's fourth-quarter results showed robust performance, surpassing expectations in organic growth and profit margins.
Ryan Specialty's fourth-quarter earnings revealed a significant organic growth rate of 16.0%, outperforming the consensus estimate of 14.4%. The company also exceeded margin expectations, reporting a 29.8% margin compared to the consensus of 29.5%.
Looking forward, Ryan Specialty has provided guidance for 2024 that aligns with consensus estimates for organic growth, between 12-13.5% versus the consensus of 13.1%, and surpasses margin expectations with a forecast of 31.0-31.5% against the consensus of 30.7%.
The company's financial strategy includes the implementation of an 11 cents regular dividend and the declaration of a 23 cents one-time special dividend.
The margin beat for the upcoming year is attributed largely to the accelerated realization of cost savings, with $25 million of the planned $50 million in savings expected to be achieved in 2024, an increase from the previously anticipated $15 million.
Citi has also increased its earnings per share (EPS) estimates for Ryan Specialty for the years 2024 and 2025 to $1.77 and $2.16, respectively. This represents a 3% increase for 2024 and a 2% increase for 2025. The revised price target of $52 is based on the anticipated higher earnings trajectory for the company.
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