WEBULL

A Look At Brown & Brown (BRO) Valuation After Court-Imposed Limits On Rival Poaching

Simply Wall St · 01/06 01:19

A Massachusetts court has issued a temporary restraining order in favor of Brown & Brown (BRO), limiting a rival broker and dozens of former employees from soliciting the company’s staff and insurance clients.

See our latest analysis for Brown & Brown.

Despite the legal win, Brown & Brown’s recent trading has been subdued. The 1-day share price return shows a 2.61% decline and the 7-day share price return shows a 4.01% decline, while the 1-year total shareholder return of a 22.59% decline contrasts with a 34.54% total shareholder return over three years and 70.87% over five years. This suggests that longer term momentum has been stronger than the more recent trend.

If legal risk and competition in insurance broking are on your radar, it can help to compare Brown & Brown with other fast growing stocks with high insider ownership as potential opportunities.

With the shares recently weaker, yet trading at what some analysts see as a discount to their price targets and certain intrinsic value estimates, is Brown & Brown quietly undervalued, or is the market already accounting for future growth?

Most Popular Narrative: 16.4% Undervalued

Brown & Brown’s most followed valuation view puts fair value at about US$92.86 per share, compared to the recent close of US$77.62.

The analysts have a consensus price target of $109.917 for Brown & Brown based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $130.0, and the most bearish reporting a price target of just $87.0.

Read the complete narrative.

Curious what earnings path and margin profile could justify a richer multiple than the broader insurance sector, even with slightly cooler growth assumptions? The full narrative spells it out.

Result: Fair Value of $92.86 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, investors still need to weigh the risk that weaker revenue growth, pressure on profit margins, or higher employee benefits costs could challenge the current valuation story.

Find out about the key risks to this Brown & Brown narrative.

Build Your Own Brown & Brown Narrative

If you look at the numbers and come to a different conclusion, or prefer to piece together your own view from scratch, you can build a tailored Brown & Brown story in just a few minutes with Do it your way.

A great starting point for your Brown & Brown research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.

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Before you move on, you can give yourself a better chance of spotting your next opportunity by lining up a few focused screeners that match what you care about most.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.