The group of insurance brokers and underwriters creates an interesting business which resides in the ASX 200. Their recent FY24 result was okay, but a slight miss on guidance for FY25 was enough to see a small pullback after the stock’s solid performance over the last year. However, the flagged headwinds in FY25 will be accretive in outer years (investment in new wholesale teams), and hence, they are not a concern to MM.
Outside of the maturing premium cycle, we believe AUB’s growth levers can continue to expand margins across all divisions, making the stock attractive into pullbacks as it starts to mirror its Australian business model in the UK. AUB trades ~at ~13% discount to comparative business Steadfast Group (SDF), which also offers a cushion of risk to a certain degree.
- We like the risk/reward towards AUB in the $27-28 area.
MM is bullish toward AUB
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