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Willis Towers (WLTW) Hits 52-Week High: What's Driving It?

Zacks Equity Research

Shares of Willis Towers Watson WLTW scaled a fresh 52-week high of $202.42 on Dec 17, eventually closing at $201.23. The company’s agreement to buy out PE Corporate Services (“PECS”) is likely to have contributed to this rally.

Over the past year, this Zacks Rank #3 (Hold) stock has rallied 33%, compared with the industry’s growth of 37.7%. Nonetheless, operational efficiencies, investment in new growth avenues and an effective capital deployment are likely to continue driving the stock.



Let’s analyze the factors responsible for the stock’s upside.

Driving Factors

Last week, Willis Towers Watson agreed to acquire PECS. The transaction details have not been disclosed. The acquisition is expected to be completed before the end of the first quarter of 2020.

PECS and Willis Towers Watson South Africa have been strategic partners since 2014. The recent buyout reflects the strategic vision of Willis Towers Watson to strengthen its position in Africa. The acquisition is a strategic fit as it will help build up human capital, improve the capabilities of Willis Towers Watson South Africa and enable Willis Towers to provide its global talent and reward solutions to clients in South Africa and across the continent.

The company beat estimates in two of the last trailing quarters, the average being 0.03%. This instilled investor confidence in the stock.

Willis Towers Watson is a leading global advisory, broking and solutions company. Its acquisitions have helped the company to foray into new markets and expand presence in countries like Italy, Canada, the U.K. and France. Its buyouts have also broadened its product portfolio. Organic growth across segments and significant synergies from acquisitions has contributed to commissions and fees and in turn revenues.

Stocks to Consider

Some better-ranked stocks from the same space are Fanhua Incorporation FANH, eHealth EHTH and Erie Indemnity Company ERIE. While Fanhua sports a Zacks Rank #1 (Strong Buy), Erie Indemnity and eHealth carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Fanhua distributes insurance products and provides property and casualty insurance, life insurance and participating insurance products in China. The company beat the Zacks Consensus Estimate in three of the last four reported quarters, the average beat being 13.44%.

eHealth operates through two segments and provides services like private health insurance exchange in the United States and China to families, individuals and small businesses. The company beat the Zacks Consensus Estimate in three of the last four reported quarters, the average beat being 161.74%.

Erie Indemnity provides sales, underwriting and policy issuance services on behalf of Erie Insurance Exchange. The company beat the Zacks Consensus Estimate in three of the last four reported quarters, the average beat being 4.90%.

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