Hold Rating on Brown & Brown Amidst Strategic Acquisition and Market Challenges

Morgan Stanley analyst Bob Huang maintained a Hold rating on Brown & Brown (BRO – Research Report) yesterday and set a price target of $120.00.

Bob Huang has given his Hold rating due to a combination of factors surrounding Brown & Brown’s recent acquisition of RSC Topco, Inc. The acquisition, valued at $9.825 billion, is a significant move for the company, funded through a mix of cash and stock. While the acquisition is expected to bring synergies and be accretive to earnings, it also involves substantial integration costs and complexities.
Despite the potential benefits, the competitive environment for mergers and acquisitions is intensifying, which could pose challenges. Furthermore, Brown & Brown’s current trading multiples suggest that the stock is fairly valued at present. Therefore, Bob Huang’s Hold rating reflects a cautious stance, acknowledging both the opportunities and risks associated with the acquisition and the broader market conditions.

According to TipRanks, Huang is a 2-star analyst with an average return of -0.2% and a 56.52% success rate. Huang covers the Financial sector, focusing on stocks such as Progressive, Allstate, and TWFG, Inc. Class A.