UPDATE: Stifel Nicolaus Upgrades Brown & Brown to Buy on Margin Improvement

Stifel Nicolaus raised its rating on Brown & Brown

from Hold to Buy and established a $32 price target. Stifel Nicolaus noted, "We're raising our rating on BRO's shares to Buy from Hold, with a 12-month target price of $32 per share, driven by three factors: 1. BRO's 2013 contingent commissions (which typically carry 90%-plus margins) should grow significantly in response to the domestic insurance industry's improving underwriting profitability YTD in 2012. 2. Several of BRO's largest states are showing signs of economic stabilization and growth, which should steadily translate into revenue growth and margin expansion. 3. Recent signs of accelerating medical cost inflation should translate into worsening loss reserve development for several commercial casualty lines of business, which should accelerate rate increases." Brown & Brown closed at $25.15 on Wednesday.