Willis Towers Watson Sees Mixed Earnings Amid Strong Market Performance
Willis Towers Watson Public Limited Company (WTW), headquartered in London, United Kingdom, stands as a prominent global advisory, broking, and solutions firm, boasting a market capitalization of $33.1 billion. The company provides various solutions to manage risk, optimize benefits, and enhance capabilities for large corporations, mid-market businesses, and small enterprises.
Over the past 52 weeks, WTW’s stock has outperformed the broader market. Shares have increased by 19.9%, whereas the S&P 500 Index ($SPX) saw a gain of 17%. On a year-to-date (YTD) basis, WTW is up 6.3%, significantly surpassing SPX’s 1.3% increase during the same period.
Despite these gains, WTW has underperformed relative to the Financial Select Sector SPDR Fund (XLF), which returned 26.5% in the past year. However, it did surpass XLF’s YTD growth of 5.4%.
On February 4, WTW’s shares dipped by 3.1% following the release of its fourth-quarter earnings. The company’s revenue for the quarter stood at $3 billion, achieving a 4% increase on a reported basis and a 5% rise organically compared to the previous year. This performance, however, fell short of Wall Street’s expectations, largely due to weaker revenue growth in the Health, Wealth & Career segment.
In a positive development, WTW saw its operating margin expand by 140 basis points, driven by cost savings from its Transformation program. This improvement contributed to a 9% year-over-year rise in adjusted earnings per share (EPS), reaching $8.13, which exceeded analyst forecasts by 1.5%. Notably, on February 19, the company announced a partnership with Cornell University aimed at assessing the risks of severe and prolonged drought globally. This announcement led to a 1% increase in WTW’s stock price on that day.
Looking ahead to the current fiscal year ending in December, analysts forecast a 1.4% growth in WTW’s EPS, projecting it to reach $17.17. The company’s earnings surprise history is promising, having exceeded Wall Street estimates in all of the last four quarters.
Within the analyst community, the consensus rating for WTW stands at “Moderate Buy,” aggregated from 21 analysts. This includes 12 “Strong Buy,” one “Moderate Buy,” seven “Hold,” and one “Strong Sell” ratings. This outlook marks a notable improvement compared to three months ago when only nine analysts recommended a “Strong Buy.”
On February 6, Roth MKM reaffirmed its “Buy” rating for WTW and adjusted its price target to $370, indicating an upside potential of 11.2%. The average price target across analysts is $355.89, suggesting a 6.9% upside from current levels, while the highest price target sits at $408, signaling a potential upside of 22.6%.
On the date of publication, Neharika Jain did not hold (either directly or indirectly) any positions in the securities mentioned in this article. All information and data herein are for informational purposes only. For more details, please view the Barchart Disclosure Policy here.
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