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With a market cap of $31.9 billion, Brown & Brown, Inc. (BRO) is a leading insurance brokerage firm that provides a wide range of insurance products, risk management solutions, and claims administration services through its Retail, National Programs, Wholesale Brokerage, and Services segments. It serves commercial, public, professional, and individual clients through a nationwide network of independent agents and brokers.
The insurance company's shares have outperformed the broader market over the past 52 weeks. BRO has increased nearly 33% over this time frame, while the broader S&P 500 Index ($SPX) has rallied 17.7%. Moreover, shares of BRO are up 9.8% on a YTD basis, compared to SPX’s 1.8% gain.
In addition, the Daytona Beach, Florida-based company has also outpaced the Financial Select Sector SPDR Fund’s (XLF) 26.5% return over the past 52 weeks and a 5.5% YTD gain.
Despite Brown & Brown's stronger-than-expected Q4 2024 adjusted EPS of $0.86 and revenue of $1.2 billion on Jan. 27, shares fell 2.6% the next day. Total expenses surged 35.7% year-over-year to $909 million, well above the estimate, driven by higher employee compensation, operating costs, amortization, and interest. Additionally, full-year adjusted EPS of $3.25 missed the consensus estimate despite an 81.2% year-over-year increase, raising doubts.
For the current fiscal year, ending in December 2025, analysts expect BRO’s EPS to grow 8.9% year-over-year to $4.18. The company’s earnings surprise history is promising. It beat the consensus estimates in the last four quarters.
Among the 15 analysts covering the stock, the consensus rating is a “Moderate Buy.” That’s based on six “Strong Buy” ratings, two “Moderate Buys,” six “Holds,” and one “Moderate Sell.”
On Feb. 13, Morgan Stanley analyst Bob Huang reaffirmed a “Buy” rating on Brown & Brown and maintained a price target of $128.
As of writing, BRO is trading below the mean price target of $116.61. The Street-high price target of $130 implies a potential upside of 15.6% from the current price levels.
