Aon cut to Underperform at Raymond James due to market neutral shift

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Aon Plc (NYSE:AON) stock has slipped 1.9% in Monday morning trading after Raymond James analyst C. Gregory Peters downgraded the company to Underperform from Market Perform as the insurance brokerage firm has the largest exposure to international revenue.

“The general trend for the group includes an expectation of slowing rates of organic growth through 2023 due to the uncertain outlook and the recent unfavorable FX swings could result in little actual reported revenue growth for companies with larger international operations,” Peters wrote in a note to clients.

The rating change is due to Raymond James’ shift to a market neutral strategy and does not reflect a negative view of management, he said.

The analyst lowered his EPS estimate for 2022 to $13.10 from $13.20, kept his estimate for 2023 at $14.30, and trimmed the estimate for 2024 to $15.75 from $15.80.

The Underperform rating contrasts with the Quant rating and average Wall Street rating, both a Hold.

In the company’s Q3 earnings slides, Aon (AON) said it expects mid-single-digit or greater organic revenue growth for FY2022 and over the long-term and expects double-digit free cash flow growth in 2022 and over the long-term. In addition, it expects to deliver adjusted operating margin expansion for the full year.

Last week, Aon’s (AON) Q3 earnings beat the average Wall Street estimate, while revenue fell short of the consensus.

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