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Based in London, United Kingdom, Willis Towers Watson Public Limited Company (WTW) is a leading global advisory, broking, and solutions company. Valued at a market cap of $33.1 billion, the company delivers solutions that manage risk, optimize benefits, and expand capabilities, among others of large companies and mid-market and small businesses.
This insurance company's shares have outpaced the broader market over the past 52 weeks. WTW has rallied 19.9% over this time frame, while the broader S&P 500 Index ($SPX) has gained 17%. Moreover, the stock is up 6.3% on a YTD basis, compared to SPX’s 1.3% gain during the same time frame.
However, zooming in further, Willis has lagged behind the Financial Select Sector SPDR Fund’s (XLF) 26.5% return over the past 52 weeks but has outpaced XLF’s 5.4% gain on a YTD basis.
On Feb. 4, shares of WTW plunged 3.1% following its Q4 earnings release, as the company delivered mixed results. The company reported revenue of $3 billion, reflecting 4% growth on a reported basis and 5% on an organic basis compared to the prior year. However, the top line marginally missed Wall Street estimates, mainly due to slightly weaker-than-expected revenue growth in its Health, Wealth & Career segment.
On a positive note, WTW's operating margin expanded by 140 basis points, primarily driven by cost savings from its Transformation program. This led to a 9% year-over-year increase in adjusted earnings to $8.13 per share, which surpassed analyst expectations by 1.5%. More recently, on Feb. 19, Willis Towers announced a new scientific partnership with Cornell University to quantify the risks of severe and sustained drought worldwide. The news excited the investors and led to a 1% rise in WTW’s stock price on the same day.
For the current fiscal year, ending in December, analysts expect Willis’ EPS to grow 1.4% year over year to $17.17. The company’s earnings surprise history is promising. It exceeded the Wall Street estimates in each of the last four quarters.
Among the 21 analysts covering the stock, the consensus rating is a “Moderate Buy,” which is based on 12 “Strong Buy,” one “Moderate Buy,” seven “Hold,” and one “Strong Sell” rating.
This configuration is significantly more bullish than three months ago, with nine analysts suggesting a “Strong Buy” rating.
On Feb. 6, Roth MKM maintained a “Buy” rating on WTW and raised its price target to $370, which indicates an 11.2% potential upside from the current levels.
The mean price target of $355.89 represents a 6.9% upside from Willis’ current price levels, while the Street-high price target of $408 suggests an upside potential of 22.6%.
