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Willis Towers Watson Poised For Guidance Raise, Wells Fargo Says In Upgrade

Priya Nigam

Willis Towers Watson PLC (NASDAQ: WLTW) appears poised to generate higher-than-expected organic revenue growth in the second quarter and could raise full-year EPS guidance, according to Wells Fargo.

The Analyst

Elyse Greenspan upgraded Willis Towers Watson from Market Perform to Outperform and raised the price target from $175 to $220.

The Thesis

Willis Towers Watson faces easy comps for organic revenue growth in the second quarter and may record around $24 million in the human capital and benefits segment in the second and third quarters due to accounting changes, Greenspan said in a Wednesday upgrade note. (See her track record here.) 

The $24 million from revenue recognition accounting changes positions the company to beat Wells Fargo's second-quarter organic revenue growth estimate of 4% as well as the full-year outlook, the analyst said. 

The Street estimates for 2019 do not accurately reflect the impact of the company's acquisition of the direct-to-consumer health care organization TRANZACT, she said. 

Wells Fargo expects Willis Towers Watson to raise its 2019 EPS guidance to reflect TRANZACT, a deal that is likely to be accretive to full-year figures “as the business earnings all [come] in Q4.”

Wells Fargo left its 2019 EPS estimate unchanged at $11, and Greenspan said the figure is  already higher than Willis Towers Watson's guidance of $10.60-$10.85.

Wells Fargo raised its 2020 and 2021 EPS estimates from $11.75 to $11.95 and from $12.75 to $13.10, respectively, to reflect stronger revenue growth.

Price Action

Willis Towers Watson stock was up 0.25% at $196.10 at the time of publication Thursday. 

Related Links:

Benzinga's Top Upgrades, Downgrades For July 11, 2019

10 Biggest Price Target Changes For Tuesday

Latest Ratings for WLTW

Date Firm Action From To
Jul 2019 Maintains Buy
Jul 2019 Upgrades Market Perform Outperform
Jul 2019 Maintains Buy

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