Aon (NYSE:AON), a professional services firm perhaps best known for its commercial insurance, recently gained 1.5% in premarket trading. Some of those gains were lost in likely profit-taking, but the gains have still held into this morning's trading as of this writing. While analysts are urging a note of caution on buying Aon shares, there's one new buyer who's thrown that caution to the wind and stepped in in a big way.
Aon's Big New Buyer
The biggest news for Aon, that in turn drove Aon stock up in the premarket, was that none other than Warren Buffett's Berkshire Hathaway (NYSE:BRK.B) picked up a stake in Aon valued at $943 million in the first quarter, based on Berkshire Hathaway's quarterly filings. This by itself is quite a step, but looking at what Berkshire sold in the process—shares of Wells Fargo (NYSE:WFC) and Chevron (NYSE:CVX)—it's clear Buffett sees something going on within Aon. Buffett has also been seen dialing back operations in banks throughout the the last year.
Earlier today, Aon announced that it will be selling its retirement and investment operations in Germany—including a range of products like pensions administration, pensions insurance brokering, and investment consulting—to Lane Clark & Peacock.
Such a sale was established to quell resistance to a separate move between Aon and Willis Towers Watson (NASDAQ:WLTW), a merger that would ultimately have created the largest insurance broker operation on Earth. With the sale completed, the chances of further opposition to the merger between Aon and Willis Towers Watson by the European Commission should be vastly reduced. WLTW stock has also seen some gains following Aon's move to sell to Lane Clark & Peacock For its part, Willis Towers Watson reportedly sold its own reinsurance operations, along with several businesses connected to corporate risk and brokerage, likely also part of the move to help ensure the merger between itself and Aon proceeds through regulatory scrutiny.
How Do Financial Analysts Feel About AON Stock?
Financial analysts are less than happy with Aon, and they've demonstrated as much—based on our latest research—by turning the consensus opinion increasingly bearish. Aon has been consensus rated a “hold” since February 2021, when it dropped from a “buy” consensus.
Back in February, Aon had eight “buy” ratings to its credit, along with five “hold” and one “sell”. By April, however, that had shifted to seven “buy”, five “hold” and one “sell”. Today, however, we're now at five “buy”, four “hold” and one “sell”, which shows analysts leaving the field altogether more than anything.
As for Aon price targets, the company remains in a fairly broad range. The current average share price target is $238.11, with a high of $287 and a low of $187 establishing the range. It's worth noting, too, that even as the overall analyst picture seems to get more bearish, recent movements for the company have been bullish as a whole. With Aon stock trading at $255.61 as of this writing, there is some downside potential in play.
Just a week ago, three analysts—Wells Fargo, JPMorgan Chase & Co., and Deutsche Bank Aktiengesellschaft—raised their price targets on Aon. Morgan Stanley also raised its target back in late April. There was only one other move made so far this year, as Atlantic Securities upgraded its outlook from “neutral” to “overweight,” but left its price target of $265 alone.
Aon's current low price target of $187, meanwhile, was established by Piper Sandler back in November of last year, when it lowered both its rating and its price target on Aon. Piper Sandler dropped the rating from “overweight” to “neutral”, and the price target from $228 to its current $187.
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