Zinger Key Points
- Arthur J. Gallagher’s stock is currently trading closer to its peers, despite higher organic growth.
- The AssuredPartners acquisition would begin being accretive to earnings from 2025.
- China’s new tariffs just reignited the same market patterns that led to triple- and quadruple-digit wins for Matt Maley. Get the next trade alert free.
While shares of Arthur J. Gallagher & Co. AJG have declined following the purchase of AssuredPartners, this acquisition is likely to be accretive to earnings from 2025, according to Piper Sandler.
The Arthur J. Gallagher Analyst: Analyst Paul Newsome upgraded the rating for Arthur J. Gallagher from Neutral to Overweight, while raising the price target from $285 to $315.
The Arthur J. Gallagher Thesis: Following the pullback in the stock, it is currently trading "closer to peers than it has in recent history," Newsome said in the upgrade note.
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The stock valuation is attractive, since Arthur J. Gallagher's stock "typically trades at a premium to peers due to higher organic growth," the analyst stated. "We estimate organic growth for AJG will be about 7.2% in 2025," he added.
AssuredPartners is "strategically good" for Arthur J. Gallagher and synergies from the acquisition are likely to be "1.4% accretive to adjusted EPS in 2025 and 8.1% accretive to adjusted EPS in 2026," Newsome further wrote.
AJG Price Action: Shares of Arthur J. Gallagher had risen by 2.18% to $285.90 at the time of publication on Wednesday.
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