Piper Sandler upgrades Aon on valuation upside

Investing.com -- Piper Sandler upgraded Aon plc (NYSE:AON) to "Overweight" from "Neutral" saying the recent stock pullback after a disappointing quarter overdone and highlighting attractive valuation and a potential catalyst from the company’s upcoming analyst day.

The firm said it expects Aon’s operational improvement efforts, including restructuring tied to its NFP acquisition, to materialize in the second half of 2025.

Piper also noted that insurance brokers are typically resilient in slower economic environments and that inflation generally supports revenue and margins.

Organic growth should reset to a reasonable expectation, the analysts say, forecasting 5% growth, in the middle of management’s guidance range, rather than at the upper end.

Despite lowering 2025 and 2026 EPS estimates, Piper said Aon’s valuation, trading at about 12 times forward 2026 EBITDA versus a historical average of 14 times, looks compelling.

Piper pointed to Aon’s analyst day on June 9 as a potential near-term catalyst, citing management’s historical skill at promoting the company.

The firm added that Aon reaffirmed 2025 guidance for mid-single-digit or greater organic revenue growth, margin expansion, strong adjusted EPS growth, and double-digit free cash flow growth.