Piper Sandler has upgraded Aon plc (AON, Financial) to an Overweight rating from its previous Neutral stance, setting a new price target of $378, slightly down from $384. This change comes after Aon reported a challenging quarter, which led to a more significant drop in its stock value than was deemed necessary. Despite a slowing environment for brokers, adjustments in expectations for Aon suggest potential improvements in operations by the latter half of 2025. The brokerage sector is typically seen as defensive, which may offer some resilience. Additionally, Aon's upcoming analyst day is anticipated as a possible turning point, given the management team's adeptness at emphasizing the firm's strengths.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 17 analysts, the average target price for Aon PLC (AON, Financial) is $404.61 with a high estimate of $468.00 and a low estimate of $315.34. The average target implies an upside of 20.47% from the current price of $335.85. More detailed estimate data can be found on the Aon PLC (AON) Forecast page.
Based on the consensus recommendation from 22 brokerage firms, Aon PLC's (AON, Financial) average brokerage recommendation is currently 2.7, indicating "Hold" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Aon PLC (AON, Financial) in one year is $418.47, suggesting a upside of 24.6% from the current price of $335.85. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Aon PLC (AON) Summary page.
AON Key Business Developments
Release Date: April 25, 2025
- Total Revenue Growth: 16% increase to $4.7 billion.
- Organic Revenue Growth: 5% for the quarter.
- Adjusted Operating Income Growth: 12% increase.
- Adjusted Operating Margin: 38.4%, down 130 basis points from Q1 '24.
- Adjusted EPS: $5.67.
- Free Cash Flow: $84 million generated.
- Capital Returned to Shareholders: $397 million through dividends and share repurchases.
- Quarterly Dividend Increase: 10% increase to $0.74 per share.
- Commercial Risk Organic Revenue Growth: 5%.
- Reinsurance Organic Revenue Growth: 4%.
- Health Solutions Organic Revenue Growth: 5%.
- Wealth Organic Revenue Growth: 8%.
- Interest Expense: $206 million, up $62 million year-over-year.
- Tax Rate: 20.9% for Q1.
- Leverage Ratio: 3.5 times.
- NFP Acquisition Impact: Contributed to margin and earnings impact.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Aon PLC (AON, Financial) reported a 16% total revenue growth, driven by 5% organic revenue growth and the acquisition of NFP.
- The company achieved a 38.4% adjusted operating income margin, contributing to a 12% growth in adjusted operating income.
- Aon PLC (AON) increased its quarterly dividend by 10%, marking the 15th consecutive year of dividend growth.
- The acquisition of NFP has been successful, with high producer retention and a strong pipeline for middle market growth.
- Aon PLC (AON) reaffirmed its 2025 full-year guidance, expecting mid-single-digit or greater organic revenue growth, margin expansion, and double-digit free cash flow growth.
Negative Points
- The company faced a 130 basis point decline in adjusted operating margin due to the impact of the NFP acquisition.
- Interest expense increased by $62 million year-over-year, reflecting higher debt levels from the NFP acquisition.
- Free cash flow generation in Q1 was lower due to higher incentive interest and restructuring payments.
- The macroeconomic environment remains unpredictable, with potential pressures on client discretionary spending due to tariffs and trade complexities.
- Aon PLC (AON) experienced a 15% decline in fiduciary investment income due to lower interest rates.
