On Thursday, CFRA raised the price target for Brown & Brown (NYSE:BRO) shares to $90 from $85, while maintaining a Hold rating on the stock. The adjustment reflects an increase in the firm's 2025 adjusted earnings per share estimate to $3.65, up $0.40, and a 2024 EPS estimate increase to $3.40, also up $0.40.
The new price target values Brown & Brown at 24.7 times the projected 2025 adjusted EPS and 26.5 times the estimated 2024 EPS. This valuation compares to the stock's one-year average forward multiple of 24.6x and the peer average of 22x.
CFRA's outlook is based on expectations that Brown & Brown will achieve brokerage revenue growth of 12% to 16% in 2024 and 10% to 15% in 2025. This follows a revenue growth of 19.1% in 2023, which was consistent with CFRA's forecasted growth range of 17% to 22%.
Organic revenue growth is anticipated to be between 7% and 12% for both 2024 and 2025. Brown & Brown's growth strategy, which is less reliant on acquisitions compared to some competitors, is expected to contribute to this organic growth. The company's acquisition plan remains a key element of its business model.
The analyst noted that Brown & Brown's projected rates of top-line growth surpass most of its peers, which is likely to support the company's premium valuation relative to its peers. Despite the current share price, CFRA considers the stock to be fairly valued when compared to peer and historical averages and believes it is worth holding.
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