Analysts Still Searching For A Tailwind To Propel Willis Towers Watson

The analyst pointed out that the stock underperformed for the year-to-date period falling 0.5 percent compared to its rivals like Aon plc Class A Ordinary Shares (UK) AON and Marsh & McLennan Companies, Inc. MMC that gained 21.2 percent and 20.9 percent. respectively. Do you have ideas for articles/interviews you'd like to see more of on Benzinga? Please email feedback@benzinga.com with your best article ideas. One person will be randomly selected to win a $20 Amazon gift card!

Related Link: Free Cash Flow In Focus For Willis Towers Watson As Investor Day Approaches

In a research note, the brokerage said, "We expect 4 percent organic revenue growth in 2017 and 2018, driven by double digit organic growth in the Exchange Solutions business and 3.5–4 percent growth in Corporate Risk and Brokerage. With this level of organic revenue growth, we see pre-tax operating margins (x/amortization) expanding to 21.2 percent in 2017 and to 22.1 percent in 2018 as expense savings from the Operational Improvement Program and merger synergies benefit results."

Meredith expects Willis Towers Watson to gain from savings from costs and is not worried even if the company failed to achieve organic revenue growth and remains flat. As a result, margin would expand from 20.3 percent on a standalone basis in 2015 to 20.4 percent in 2017.

Another factor in support of increasing the price target is expected FCF growth per share from $1.80 in 2015 to $9.87 in 2018 driven by enhanced margins and a drop in pension costs.

At time of publication, Willis Towers was up 0.8 percent at $129.03.

Full ratings data available on Benzinga Pro.