Analyst: Don't Expect Willis Towers Watson To Hit 2018 Targets

Goldman Sachs has recently launched coverage on three insurance brokers with a neutral coverage view. While the investment bank has a positive view on the group’s fundamentals, Goldman issued a bearish rating on the property and casualty insurer Willis Towers Watson PLC (NASDAQ: WLTW).

The Analyst

Yaron Kinar of Goldman Sachs initiated coverage on Willis Towers Watson with a Sell and a $153 price target.

The Thesis

Consensus estimates are too high on Willis Towers Watson, and the company will underperform its peers in terms of organic growth, Kinar said in a note. (See Kinar's track record here.) 

Despite a Neutral view on the industry, Goldman Sachs' Sell rating for Willis Towers Watson is largely driven by weak organic growth and the risk that the company's execution of restructuring and integration programs will cause it to miss 2018 targets, the analyst said. 

A competitive practices investigation by the European Union into the placement of aviation insurance and a UK regulatory study into London wholesale brokerage practices could have a heavy impact on Willis Towers Watson's brokerage business, given its high exposure to the London market, Kinar said. 

“Should the study result in meaningful industry ramifications, they could disproportionately affect WLTW’s brokerage business by comparison to those of its peers,” he said. 

Price Action

Willis Towers Watson closed down 2.14 percent at $158.48. 

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