Brown & Brown, Inc. Surges Ahead Despite Recent Adjusted Earnings Setback
Insurance Brokerage Firm Shows Strong Market Performance
With a market cap of $31.9 billion, Brown & Brown, Inc. (BRO) stands as a major player in the insurance brokerage industry. The firm offers a variety of insurance products, risk management solutions, and claims administration services through its different segments: Retail, National Programs, Wholesale Brokerage, and Services. It caters to commercial, public, professional, and individual clients through a vast network of independent agents and brokers across the nation.
Over the past 52 weeks, the company’s shares have surpassed the overall market. BRO has risen nearly 33% during this period, while the S&P 500 Index ($SPX) gained 17.7%. Year-to-date, BRO’s shares are up 9.8%, significantly outperforming SPX’s modest 1.8% increase.
Additionally, Brown & Brown has also outperformed the Financial Select Sector SPDR Fund’s (XLF) 26.5% return in the same 52-week timeframe, as well as its 5.5% gain for the year.
In its most recent report on January 27, Brown & Brown revealed a strong Q4 2024 adjusted EPS of $0.86 and revenue of $1.2 billion. However, shares plummeted 2.6% following the announcement. Total expenses surged 35.7% year-over-year to reach $909 million, exceeding estimates due to increased employee compensation, operational costs, amortization, and interest expenses. Furthermore, a full-year adjusted EPS of $3.25 fell short of the consensus estimate, despite an impressive 81.2% increase from the previous year, which raised investor concerns.
Looking ahead, analysts forecast that BRO’s EPS will grow 8.9% year-over-year to reach $4.18 for the fiscal year ending in December 2025. The company has a positive history of earnings surprises, having beaten consensus estimates in the last four quarters.
Among the 15 analysts covering Brown & Brown, the consensus rating stands at “Moderate Buy.” This rating is supported by six “Strong Buy” recommendations, two “Moderate Buys,” six “Holds,” and one “Moderate Sell.”
On February 13, Morgan Stanley analyst Bob Huang maintained a “Buy” rating for Brown & Brown with a price target of $128.
Currently, BRO is trading below the average price target of $116.61. The highest price target of $130 suggests a potential upside of 15.6% compared to the current price levels.
On the date of publication, Sohini Mondal 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.
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