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solzberg in Gainers & Losers,

Marsh & McLennan to reach $65 in near term

Marsh & McLennan, a US-based multinational professional services firm, recently announced that its subsidiary had acquired insurance broker Corporate Consulting Services to provide clients with more efficient and broader range of services. Financial details of the deal were not disclosed.

Corporate Consulting Services offers employee benefits, retirement planning and human resource consulting services and caters to various clients from the non-profit and for-profit sectors across the Northeast US. So, the deal will further boost Marsh & McLennan’s already robust employee benefits services. Also, it will significantly enhance the company’s client services in the Northeast.

To note, Marsh & McLennan regularly undertakes strategic acquisitions to enhance its growth profile. To that end, in March, the company acquired Celedinas Insurance Group for nation-wide expansion of its private client capabilities. Earlier this year, Marsh & McLennan bought UK-based insurance broker Jelf Group and CPSG Partners, a provider of Workday implementation services.

Marsh & McLennan’s fourth quarter 2015 financials were solid, with both top and bottom line exceeding consensus estimates. Revenues increased 3% y-o-y to $3.3 bn, Adjusted operating margin expanded 60 basis points to 17.6%, and earnings per share of 71 cents improved 7.6%. In Q4, Marsh & McLennan bought back 1.4 mn shares for $75 mn, while a quarterly dividend of 31 cents offers a healthy dividend yield of 2%.

I believe that the recent acquisitions and focus on cost reduction and expense management will allow Marsh & McLennan to continue to deliver solid financials in the coming quarters. 

Shares of Marsh & McLennan are currently consolidating above the $60 resistance level. I expect the stock to continue growth, with near term target at $65.