BRO stock (NYSE:BRO) price plummeted on Tuesday, falling as high as 12.6% at about 11 a.m. ET and still down 11% by 12:30 p.m. ET. Year to date, the stock is down nearly 20%, trading at about $55 per share.
It was a dramatic contrast to what had begun as a positive day for the markets, with all of the main indexes up on Tuesday, with the Nasdaq Composite leading the way, up roughly 2% at 12:30 p.m. ET.
What Happened to BRO Stock?
Brown & Brown, a renowned insurance broker, reported third-quarter profits after the market closed on Monday, missing sales and earnings projections.
Revenue was $928 million, up 20.4% year on year, but adjusted earnings per share (EPS) were $0.50, down from $0.58 the previous year. These figures fell short of analysts’ expectations, which called for $943 million in sales and $0.60 per share.
Organic revenue, which includes core commissions and fees, was up 6.7% yearly to $799 million, while earnings before interest, taxes, depreciation, amortization, and the change in projected acquisition earn-out payables (EBITDA) increased 5.8% year on year to $290 million.
High expenditures, up 24% year on year to $710 million, offset revenue growth, with staff salaries and benefits and operational expenses seeing the highest increases.
So, What Now?
Brown & Brown acts as a middleman between insurance providers and the people and companies that purchase it as a property and casualty insurance broker. Brokers strive to deliver the finest insurance packages for their client’s businesses by leveraging their buying power. They generate the majority of their money from selling insurance products via commissions and fees.
Despite the earnings setback, Brown & Brown saw a large growth in sales. Bringing in new team members from recent acquisitions increased expenditures, but expenses should drop after the purchases of two United Kingdom-based insurers serving the United Kingdom, and Europe are integrated.
Analysts put an average price objective of $70 on BRO stock (NYSE:BRO), representing a 25% increase from current levels. Brown & Brown (NYSE:BRO) maintains a fairly durable company as a top independent broker with a broad reach offering a vital service without the risks that underwriters bear.
Featured Image- Megapixl @ Nialowwa
Author Okoro Chinedu 
