Reduced Earnings Estimates For Arthur J. Gallagher As Barclays Sees Less Organic Sales Growth

Arthur J Gallagher & Co AJG webcast an investor meeting Friday.

Following the informal meeting, Barclays analyst Jay Gelb reduced the firm's 2016/2017 EPS estimate from $2.82/$3.10 to $2.76/$3.05. The decision was based on "lower-than-anticipated margin expansion in Brokerage, and slower organic growth in Risk Management," according to Gelb.

Gelb maintains an Overweight rating with a price target of $52.

Gallagher's brokerage organic revenue growth in the second quarter was 2.2 percent and is expected to be approximately 3 percent for fiscal year 2016 as a whole, according to Barclays.

Related Link: Arthur J. Gallagher Reports Purchase Of Victory Insurance Agency, No Terms Disclosed

Gallagher expressed anticipation of organic revenue growth to recover in the second half of 2016 following the disappointing second quarter.

"AJ Gallagher can expand margins in Brokerage if organic revenue growth exceeds 3 percent," stated Gelb. "The company currently appears more focused on growth than margin expansion."

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