WTW Stock Surges 34.5% in Three Months: What Should Investors Do Now?

Shares of Willis Towers Watson Public Limited Company (WTW) have gained 34.5% in three months, outperforming the industry’s growth of 21.3%.

WTW’s performance was supported by continued margin expansion, AI-driven productivity initiatives, a strong specialty business pipeline and disciplined capital returns. The second quarter 2026 earnings beat and continued organic growth across key businesses, along with cost discipline, have further strengthened investor confidence. The expected long-term earnings growth is pegged at 17.6%, better than the industry average of 14.4%.

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Shares of other insurance brokers like Aon plc AON, Arthur J. Gallagher & Co. AJG and Brown & Brown, Inc. BRO have gained 10.6%, 16.6% and 3.2%, respectively, in the past three months.

WTW's Average Target Price Suggests Upside

Based on short-term price targets offered by 20 analysts, the Zacks average price target is $377.40 per share. The average suggests a potential upside of 13% from the last closing price.

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WTW’s Valuation

Willis Towers Watson's shares are trading at a discount compared with the industry. Its forward price-to-earnings multiple of 15.56X is lower than the industry average of 16.6X. The company, however, has a Value Score of C.

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WTW’s Growth Projection Encourages

The Zacks Consensus Estimate for Willis Towers Watson's 2026 earnings per share (EPS) indicates a year-over-year increase of 15.8%. The consensus estimate for 2026 revenues is pegged at $10.51 billion, implying a year-over-year improvement of 8.2%. The consensus estimate for 2027 EPS and revenues indicates an increase of 14.1% and 5%, respectively, from the corresponding 2026 estimates.

Optimistic Analyst Sentiment on WTW

The company has witnessed nine upward earnings estimate revisions for 2026 over the past 30 days, while 2027 has observed eight upward earnings estimates against no downward revisions. Thus, the Zacks Consensus Estimate for 2026 and 2027 moved 1.6% and 2.8% north, respectively, over the same period.

WTW's Efficient Use of Shareholder Funds

Willis Towers Watson’s return on equity of 22.2% for the trailing 12 months compared favorably with the industry’s 18.8%, reflecting the company’s efficiency in utilizing shareholders’ funds.

Factors That Benefit WTW

WTW continues to benefit from solid organic growth across its key businesses, supported by strong client retention, new business wins and demand for risk-management and advisory services. A strong specialty business pipeline and growing demand for specialized risk solutions should further support organic growth, while expansion in higher-value specialty offerings is expected to improve the overall business mix.

WTW's AI strategy and margin expansion remain key long-term growth drivers. The company is extending its efficiency program through Propel, a two-year plan to embed AI and automation across its operations. Management expects AI-driven automation and analytics to improve productivity, strengthen client engagement and expand margins.

The company’s acquisition of Newfront adds a technology-enabled, middle-market broker operating across both Health, Wealth & Career and Risk & Broking, aligning with WTW’s focus on specialization, innovation and efficiency. Management expects Newfront to contribute about $250 million of post-close revenues in 2026 with an adjusted EBITDA margin of nearly 26%, though it is expected to have an approximately 10-cent impact on adjusted EPS in 2026.

Rising healthcare costs and increasing benefit complexity are driving demand for WTW's health consulting. During the second quarter of 2026, the health segment revenue grew 8%. Management expects high-single-digit growth for 2026.

Willis Towers Watson's solid balance sheet and steady cash flow are expected to help the company deploy capital through buybacks, dividend payouts, debt repayments and acquisitions. Operating cash flow totaled $474 million during the first six months of 2026, up 45.4% from the prior-year period. Free cash flow increased 65.9% year over year to $360 million, primarily driven by operating margin expansion. WTW repurchased about 1.7 million shares for $450 million during the second quarter and expects share repurchases of $1 billion or greater in 2026.

Risks for WTW

WTW faces intense competition and softer insurance rates, which could pressure commission growth and increase client acquisition costs.

Unfavorable exchange-rate movements could also negatively impact earnings and operating results despite the company's hedging programs. Management expects foreign currency to provide an additional 5-cent tailwind in the second half of 2026, bringing the full-year benefit to approximately 35 cents.

Conclusion

WTW boasts growth through AI initiatives, specialty insurance expansion, the Newfront acquisition, effective capital deployment and continued margin improvement. However, intense competition, softer insurance pricing and foreign exchange volatility remain key risks.

Given its solid growth projections, optimistic analyst sentiment, cheap valuations and favorable ROE, it is wise to add this Zacks Rank #2 (Buy) to the portfolio now. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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