UPDATE: Goldman Sachs Upgrades Aon to Buy on Risk/Reward
Goldman Sachs raised its rating on Aon (NYSE: AON) from Neutral to Buy and increased its price target from $52 to $62.
Goldman Sachs said, "We upgrade shares of AON to Buy as we believe that AON's strategy to focus on accretive buybacks is particularly appropriate given its growing cash earnings, improving capital flexibility, diminishing cash obligations, and low current valuation. AON's ability to deploy capital is not linked to its share price, thus persistently low valuation is a tactical benefit for AON to deploy capital accretively. We note that AON's discounted multiple appears to reflect investor dissatisfaction with either its quarterly results or commentary (as the stock has fallen an average of 2% over the past six earnings releases), but if AON can “stick to the plan” over the next 12 months, we expect the “disappointment discount” to fade compared to peers."
Aon closed at $53.16 on Thursday.
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