UPDATE: J.P. Morgan Downgrades Towers Watson & Co. to Neutral, Raises PT Following Analyst Day

In a report published Monday, J.P. Morgan analyst Jeffrey Y. Volshteyn downgraded the rating on Towers Watson & Co. TW from Overweight to Neutral, but raised the price target from $92.00 to $105.00. In the report, J.P. Morgan noted, “On Friday, we attended Towers Watson's Analyst Day in Washington, D.C. TW team highlighted numerous attractive growth opportunities for its Exchange business (3% of revenues). That said, TW's new FY14 guidance suggests that revenues at TW's core businesses will likely decelerate due to difficult y/y comparables in Benefits and broader challenges in Risk & Financial Services (R&FS)). TW's FY14 guidance also reflects a modest 25bps y/y margin expansion and adj. EPS of $5.69-$5.79 (ex. $0.21 of one-time tax benefit in 1QF14, vs. prior consensus of $5.78). While we are comfortable with the intermediate-term story, we think shares of TW already reflect a sizeable Exchange opportunity following 80%+ rally in 2013 (including a 25% lift in September). While we still consider TW's recurring diversified revenues to be attractive in the current uncertain environment, we are downgrading shares of TW to Neutral due to deceleration in the core business. Our new Dec'14 PT is $105.” Towers Watson & Co. closed on Friday at $102.99.
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Posted In: Analyst ColorDowngradesAnalyst RatingsJ.P. MorganJeffrey Y. Volshteyn
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