Marsh & McLennan Companies, Inc. (NYSE:MMC) reported better-than-expected third-quarter performance, driven by higher consulting revenue and continued margin resilience.
Keefe, Bruyette & Woods analysts, led by Meyer Shields, raised their rating on Marsh & McLennan Companies to Market Perform from Underperform while trimming its price forecast to $191 from $209.
The company’s Chief Executive, John Doyle, told investors during the conference call that slowing property and casualty (P&C) pricing and economic uncertainty weighed on U.S. and Canadian organic growth, which rose 3% in the third quarter, short of expectations.
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The CEO noted that the Marsh Global Insurance Market Index fell 4% year-over-year, with modest declines across property and professional lines partly offset by smaller drops in cyber rates.
The brokerage said the MMC’s recent decline already reflects softening P&C insurance pricing. The company’s shares trade at about 18.1 times the firm’s updated 2026 cash EPS forecast, below the long-term average.
Updated Financial Projections and Margin Estimates
KBW raised its cash EPS estimates for Marsh & McLennan to $9.60 for 2025, $10.30 for 2026, and $11.40 for 2027, reflecting stronger-than-expected third-quarter results driven by higher consulting revenue and margins in both Risk & Insurance Services (RIS) and Consulting, partly offset by weaker RIS revenue.
The analysts maintained their 2025 adjusted operating margin forecast for the Risk & Insurance Services (RIS) segment at 31.8%, while slightly increasing their estimates for the following years to 32.2% in 2026 from 32.0% previously and to 32.8% in 2027 from 32.5%.
KBW said MMC’s business mix remained consistent between the second and third quarters. However, because property brokerage tends to rely more on commission-based compensation than casualty lines, the further decline in property rates added pressure to the company’s third-quarter organic revenue growth.
New ‘Thrive’ Program and Corporate Rebranding
The new “Thrive” program, unveiled by Doyle, targets $400 million of savings from improving efficiencies, process improvement, and automation, including AI deployment. .
MMC also plans to rebrand most operations under the “Marsh” name, which KBW said could aid cross-selling, though it questioned the need to phase out strong legacy brands like Mercer and Guy Carpenter.
Analysts said their $191 price forecast is based on a valuation of 18.5 times MMC’s estimated 2026 cash EPS.
Price Action: MMC shares were trading higher by 2.05% to $190.30 at last check Friday.
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