Towers Watson Maintains Buy Rating at Deutsche Bank
Tuesday, September 20, 2021 2:18 PM

Analysts at Deutsche Bank retained Buy rating of Towers Watson & Co. (NYSE: TW) as they believe that the latter is more focused on accelerating organic revenue growth via a dedicated innovation group, additional revenue synergies, and increased headcount. They set a price target of $73 for the stock.

DB analysts state that Towers Watson expects revenue of $3.5 billion, above their estimate of $3.46 billion and consensus of $3.44 billion, and EBITDA of $4.85 to $5, in line their estimates and better than consensus of $4.85 billion. They add that the company expects free cash flow of $275 million to $300 million and capital expenditure of $100 million, prior to Wall Street consensus of $270 million to $377 million, and $120 million, respectively. They state that they have raised their free cash flow estimate 8 percent from $270 million to $291 million, now $4 per share. They state that the firm has not seen a slowdown in demand and management hasn’t seen a change in client behavior and expects the business to continue to see strong demand for the next six to nine months. The company’s management believes that Towers Watson generated $80 million, up 3 percent in revenue synergies in FY2011. Management believes the company can maintain growth above market levels for at least a couple of more quarters.

On a year-to-date basis, Towers Watson has a share performance of 12.37 percent and as compared to Standard and Poor’s 500, it has an YTD share performance of 16.22 percent.

Towers Watson is a global consulting firm. Its principal lines of business are risk management and human resource consulting. It has a market capitalization of $4.33 billion with a P/E ratio of 15.27. It has more than 74 million outstanding shares.

Shares of Towers Watson gained 1.32 percent or 78 cents to trade at $59.89.