BMO Capital Market analyst Michael Zaremski downgraded Willis Towers Watson PLC WTW to Underperform from Market Perform at a decreased price target of $205 from $230.
The analyst is bearish on the stock following the Q2 FY23 EPS miss and FY24 guidance cut.
Last month, the company reported adjusted EPS of $2.05, missing the consensus of $2.33, and sales of $2.16 billion beat the consensus of $2.13 billion.
The company lowered FY24 guidance for adjusted EPS to $15.40-$17.00 (from $17.50-$20.50 prior) and adjusted operating margin to 22.5%-23.5% from 23%-24% earlier.
Zaremski expects Willis to continue re-invest most of its expense program’s savings in talent to regain market share.
The analyst thinks margin headwinds on new hires can lead to downward EPS revisions in future.
Consequently, the analyst reduced estimates for adj. EPS to $13.68 (from $14.04) in 2023 and $15.14 (from $16.45) in 2024.
Price Action: WTW shares are trading lower by 3.17% at $204.90 on the last check Tuesday.
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