Marsh & McLennan Faces Challenges Despite Steady Earnings Growth
Marsh & McLennan Companies, Inc. (MMC), a leading professional services firm based in New York City, is grappling with market pressures even as it posts solid earnings. With a market cap of $111.9 billion, MMC specializes in risk management, insurance broking, consulting, and investment advisory.
Over the past year, however, MMC’s shares have gained 14.8%, falling short of the S&P 500 Index ($SPX) that has rallied nearly 31.3%. Year-to-date in 2024, MMC shares are up 21.8%, which still trails the SPX’s 25.5% increase.
In comparison to the SPDR S&P Insurance ETF (KIE), which has seen 36.4% gains over the past year and 36.1% returns so far this year, MMC’s performance appears weak.
Concerns over potential legal liabilities linked to its insurance brokerage operations have contributed to MMC’s underperformance, along with increasing competition from long-established insurance companies and disruptive insurtech startups.
After the company reported its Q3 earnings on October 17, MMC experienced a slight dip in share price. The firm announced adjusted earnings per share of $1.63, reflecting a 3.8% increase from the previous year and surpassing the consensus estimate of $1.61. However, total revenue of $5.70 billion, while a 5.9% rise, fell just short of analysts’ projections. These figures highlight the company’s steady earnings growth, but they also signal the challenges of meeting revenue targets in a competitive marketplace.
Looking ahead to the current fiscal year ending in December, analysts project that MMC’s EPS will grow 8.6% year over year to $8.68 on a diluted basis. The company has a strong earnings surprise history, having exceeded the consensus estimate in all four quarters.
Among the 22 analysts tracking MMC stock, the consensus rating stands at “Hold.” This includes four “Strong Buy” ratings, one “Moderate Buy,” 15 “Holds,” one “Moderate Sell,” and one “Strong Sell.”
This rating distribution has remained stable in recent months. On November 21, Morgan Stanley analyst Bob Huang maintained a “Hold” rating on Marsh & McLennan, setting a price target of $230, which suggests that the stock is currently priced at a premium.
The average price target for MMC is $232.85, slightly above its current price, while the highest target of $259 indicates potential upside of 12.3%.
On the date of publication, Rashmi Kumari did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here. More news from Barchart
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
