Arthur J. Gallagher Snaps Up Lloyd Bedford Cox, Impresses at Investor Day

Arthur J. Gallagher & Co. (AJG) acquired Lloyd Bedford Cox., Inc. (LBC), a retail insurance agency that provides comprehensive insurance coverage, services, and risk assessment tools to high-net-worth individuals and families throughout the United States, Europe, the Bahamas, and the Caribbean. The terms of the deal were not disclosed. Shares of the global insurance brokerage and risk management services firm closed at $145 on September 14.

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The team of the acquired company will continue to run their operations from the current location under the leadership of Patrick Kennedy, head of Gallagher’s Eastern region retail property/casualty brokerage operations. (See Arthur J. Gallagher stock charts on TipRanks)

Commenting on the deal, J. Patrick Gallagher, Jr., Chairman, President, and CEO of AJG, said, “The LBC team has earned a great reputation for its expertise in serving emerging affluent and high-net-worth clients, and this provides us an opportunity to expand our high-net-worth practice in a key market.”

Additionally, AJG hosted its investor day yesterday, following which Wells Fargo analyst Elyse Greenspan lifted the price target on the stock to $172 (18.6% upside potential) from $170 while maintaining a Buy rating.

Impressed by the bullish investor day insights, Greenspan said, “To us, the biggest takes were around its stronger organic growth and margin guidance, combined with what seemed like a desire to roll out a cash earnings metric next year.”

The analyst also noted that AJG updated its Q3 and 2021 outlook and provided an initial view on 2022. He is encouraged by the elevated margin profile undertaken through the expense savings initiative and the company’s strong organic revenue outlook. He believes brokers with strong margins tend to have the highest valuations, and hence his optimistic stance on AJG.

Greenspan added, “AJG is positioned to show strong organic revenue growth, continues to add bolt-on acquisitions, and is growing its EBITDA. Further, the company will benefit from increased scale in reinsurance following acquired Willis Re’s treaty reinsurance business in a deal that is expected to close in Q4 2021.”

The Wall Street community is cautiously optimistic about the stock with a Moderate Buy consensus rating based on 6 Buys and 4 Holds. The average Arthur J. Gallagher price target of $158.50 implies 9.3% upside potential to current levels. Shares have gained 40.8% over the past year.