On Wednesday, Truist Securities increased its stock price target for Willis Towers Watson (NASDAQ:WTW) shares to $380 from $365 while sustaining a Buy rating for the stock.
The company's shares, currently trading at $329.06, have shown strong momentum with a 29.77% gain over the past six months. According to InvestingPro data, the stock is trading near its 52-week high of $329.70, though technical indicators suggest it may be in overbought territory.
The adjustment follows the investment firm's attendance at Willis Towers Watson's Investor Day held in New York City. Truist Securities reported that the company's management provided an outlook that met or surpassed their expectations.
Key highlights included positive developments regarding the Corporate Risk and Broking (CRB) operating margin targets, as well as projections for free cash flow. The company has demonstrated consistent shareholder returns, maintaining dividend payments for 22 consecutive years with a current yield of 1.07%.
According to the Chief Financial Officer of Willis Towers Watson, the normalized free cash flow is anticipated to surpass 17.5%. This forecast suggests a potential rise in the stock valuation nearing $400, assuming the company continues to maintain its current free cash yield.
Moreover, Truist Securities speculates that there is room for improvement in the stock's valuation if the free cash yield aligns with the group norm. For deeper insights into WTW's valuation metrics and financial health analysis, investors can access the comprehensive Pro Research Report available on InvestingPro, which covers over 1,400 US equities.
The revised stock price target of $380 is based on an 18% free cash flow (FCF) margin applied to a cash yield multiple of 4.1%. The firm's analysis indicates a positive outlook for Willis Towers Watson's financial performance and stock value.
Truist Securities had previously noted on November 27 the potential for Willis Towers Watson's stock to climb higher. This latest price target increase reaffirms the firm's confidence in the company's financial health and growth trajectory.
In other recent news, Willis Towers Watson (WTW) announced its strategic partnership with Bain Capital to re-enter the treaty reinsurance broking market. The alliance aims to combine WTW's extensive network and expertise with Bain Capital's experience in building insurance businesses.
In addition to this, WTW has reported a 6% rise in organic revenue growth in the third quarter of 2024, largely driven by a 10% increase in Risk & Broking and a 4% rise in Health, Wealth & Career segments.
The company's adjusted operating margin improved by 190 basis points to 18.1%, and adjusted diluted earnings per share reached $2.93, marking a 31% increase year-over-year. Moreover, the Board of Directors authorized an additional $1 billion to its share repurchase program. Following these developments, Keefe, Bruyette & Woods and Truist Securities maintained a positive outlook on WTW's stock, with Keefe raising its price target from $352 to $359.
WTW also announced strategic partnerships and divestitures, including the sale of TRANZACT and an investment in Atomos. Despite a 1% decline in Benefits, Delivery & Outsourcing due to strong prior-year comparables and client insourcing effects, the company remains optimistic about achieving its 2024 targets. These are the recent developments for Willis Towers Watson.
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