Analyst Michael Ward CFA of Citi maintained a Buy rating on Brown & Brown (BRO – Research Report), retaining the price target of $94.00.
Michael Ward CFA has given his Buy rating due to a combination of factors surrounding Brown & Brown’s recent performance and future outlook. The primary driver for the favorable rating is the company’s impressive organic growth, which accelerated in the first quarter, surpassing both the previous quarter and consensus estimates. This growth was consistent across all three of the company’s segments, indicating a robust and broad-based expansion. Additionally, Ward notes that the company’s outlook is positive, with expectations of continued economic growth and rising casualty pricing, both of which bode well for the brokerage industry as a whole.
Furthermore, Ward highlights the exceptional organic growth in the Programs segment, which notably overcame significant headwinds from the previous year. Despite some concerns about margins excluding profit commissions and investment income, the overall strong quarterly performance suggests a supportive environment for brokers. The report also points to a solid earnings beat driven in part by a lower tax rate, which, although it may not recur, still contributed to the positive short-term outcome. These factors combined provide a basis for Ward’s expectation of a 13.9% expected share price return, underpinning the Buy recommendation for Brown & Brown’s stock.
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Brown & Brown (BRO) Company Description:
Brown & Brown, Inc. is an insurance agency, wholesale brokerage, insurance programs and service organization. It engages in the provision of insurance brokerage services and casualty insurance underwriting services. It operates through the following segments: Retail; National Programs; Wholesale Brokerage; and Services. The Retail Segment receives fees in lieu of commissions. The National Programs segment acts as a managing general agent and provides professional liability and related package products for certain professionals, a range of insurance products for individuals, flood coverage, and targeted products and services designated for specific industries, trade groups, governmental entities and market niches. The Wholesale Brokerage segment markets and sells excess and surplus commercial and personal lines insurance, primarily through independent agents and brokers, as well as company’s retail agents. The Services segment provides insurance-related services, including third-party claims administration and comprehensive medical utilization management services in both the workers’ compensation and all-lines liability arenas, as well as medicare Set-aside services, social security disability and medicare benefits advocacy services and claims adjusting services. The company was founded by J. Adrian Brown and Charles Covington Owen in 1939 and is headquartered in Daytona Beach, FL.
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