Goldman Sachs analyst Yaron Kinar upgraded Willis Towers Watson PLC to "buy" and downgraded Aon PLC to "neutral."
Kinar expects the impact of Willis Towers Watson's restructuring and efficiency initiatives to be "more pronounced" and its EBITDA margin improvement to be above peer average in 2019. Additionally, he expects the negative spread between the company's free cash flow margins and peers' to "meaningfully compress" in 2019.
He raised his price target on Willis Towers Watson to $179 from $163. He maintained his 2018 EPS estimate at $9.80 but increased his EPS projections to $11.05 from $10.85 for 2019 and to $12.35 from $11.85 for 2020. His 2021 EPS estimate for the company is $13.75.
Kinar downgraded Aon following the stock's outperformance in 2018. He wrote that he still views the company favorably, but upside over the next 12 months is more limited, specifically when considering currency headwinds, challenges in margin expansion excluding restructuring and tough organic growth comparisons.
Kinar lowered his price target on Aon to $163 from $171. He raised his 2018 EPS estimate to $8.10 from $8.05 for 2018 but decreased his EPS estimates for 2019 and 2020 to $8.95 from $9.15 and to $10 from $10.20, respectively.