On Friday, Goldman Sachs (NYSE:GS) maintained a Neutral rating on Ryan Specialty Group (NYSE:RYAN) with a steady price target of $54.00 for the shares. The firm's analysis followed the company's first quarter 2024 results, which showed an adjusted earnings per share (EPS) of $0.35.
This figure surpassed the Visible Alpha Consensus and Goldman Sachs estimate of $0.34 but matched the FactSet consensus of $0.35. Ryan Specialty's performance was attributed to robust total revenue growth and a margin that met expectations at 28.5%.
The company's organic growth, however, fell short of the 13.6% anticipated by Visible Alpha Consensus and the 13.5% forecasted by Goldman Sachs by approximately 80 basis points, registering 12.8% under the legacy methodology and 13.7% under a new calculation method. Despite this, the company's management commentary was seen as consistent with the previous quarter's market environment.
Ryan Specialty Group's updated organic growth projection ranges between 12.5% and 14.0%, aligning with the prior guidance after accounting for changes in the organic growth calculation.
The margin guidance remains unchanged at 31.0% to 31.5%, even with an additional $10 million in savings from restructuring efforts, totaling $60 million in savings compared to the previous estimate of $50 million. This restructuring is predicted to contribute an incremental $5 million, or 20 basis points, to the 2024 margin.
Investor sentiment may lean towards the negative due to the miss in organic growth, especially considering the higher expectations set by strong performances from peers and recent positive commentary on the Excess & Surplus (E&S) lines market. This includes a rebound in April E&S stamping office data, which has recently underpinned a rise in Ryan Specialty's stock price.
InvestingPro Insights
As investors digest the latest earnings report from Ryan Specialty Group, real-time data from InvestingPro offers additional context for evaluating the company's financial health and market position. With a market capitalization of $13.78 billion and a high earnings multiple of 98.95, the company's valuation reflects investor optimism about its future growth prospects. This is further underscored by a robust Price / Book multiple of 24.61 as of the last twelve months ending Q4 2023.
InvestingPro Tips highlight that Ryan Specialty is expected to see net income growth this year, which aligns with the positive earnings surprise in the recent quarter. Additionally, the company has demonstrated a strong return over the last three months, with a 24.09% price total return, signaling investor confidence. These metrics, alongside the analyst prediction that the company will be profitable this year, could provide reassurance to investors concerned about the organic growth miss.
For those looking to delve deeper into Ryan Specialty's financials and market performance, InvestingPro offers a wealth of additional tips. To access these insights and make more informed investment decisions, consider using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. With 6 more InvestingPro Tips available, subscribers can gain a comprehensive understanding of the company's outlook and potential investment opportunities.
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