Arthur J. Gallagher & Co "Upside to margins and attractive valuation;..."

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Arthur J. Gallagher & Co "Upside to margins and attractive valuation;..."

Global Research

8 June 2026ab

Arthur J. Gallagher & Co Equities

United StatesUpside to margins and attractive valuation;

Upgrade to Buy Insurance, Property & Casualty

12-month rating Buy

Prior : Neutral

12m price target US$250.00Resilient organic growth and margin expansion; Upgrade to Buy

Prior : US$283.00

We are upgrading AJG to Buy given greater upside from AssuredPartners synergies and

AI-driven cost savings, which we believe are underestimated by consensus. We are Price (05 Jun 2026) US$216.14

above consensus on margins by 70bps through 2026-28E, reflecting synergies, RIC: AJG.N BBG: AJG US

operating leverage, and AI productivity gains. The current valuation around 11.5x EV/

EBITDA NTM offers an attractive entry point amid concerns over softer commercial Trading data and key metrics

pricing and AI disintermediation and we see the market undervaluing AJG’s growth 52-wk range US$328.76-192.00

model, brokerage resilience, and margin potential. HOLT analysis suggests the market is Market cap. US$56.3b

pricing little to no terminal growth, versus our 5% organic growth forecast for 2026– Shares o/s 260m (COM)

2030E, which we view as overly pessimistic given AJG’s track record. Our new PT is $250 Free float 65%

(from $283) on a lower target multiple of 12x EV/EBITDA (from 13x). Despite this, we see Avg. daily volume ('000) 503

compelling upside and upgrade AJG to Buy. Avg. daily value (m) US$106.1

Common s/h equity (12/26E) US$24.9b

Market is currently pricing in no organic growth for AJG P/BV (12/26E) 2.2x

We use the UBS HOLT framework to assess what the market is pricing in longer term Net debt to EBITDA (12/26E) 2.1x

given market concerns about AI disrupting the insurance brokerage industry.