Key Takeaways:
- AssuredPartners Integration: The $13.45 billion acquisition closed in August 2025, adding significant scale and capabilities
- Price Projection: Based on current execution, AJG stock could reach $305 by December 2027
- Potential Gains: This target implies a total return of 19.5% from the current price of $255
- Annual Return: Investors could see roughly 9.7% annual growth over the next 1.9 years
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Arthur J. Gallagher (AJG) just posted its 19th consecutive quarter of double-digit revenue growth. The insurance brokerage giant delivered 20% revenue growth in Q3 2025, driven by organic expansion and strategic acquisitions.
CEO Pat Gallagher is executing a deliberate strategy of organic growth supplemented by M&A.
- The company’s two-pronged approach generated 4.8% organic growth in Q3, expanded adjusted EBITDAC margins by 26 basis points, and grew adjusted earnings 27% year-to-date.
- Gallagher posted 6.6% year-to-date organic growth with EBITDAC margins exceeding 36%.
- The AssuredPartners acquisition closed mid-August, bringing 30,000 new agents and brokers and $3.4 billion in annual revenue.
- Management expects organic growth around 5% in Q4, bringing full-year organic growth above 6%.
Despite some property-pricing headwinds, Gallagher stock trades at $255, offering upside for investors who recognize the company’s market position and integration capabilities.
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What the Model Says for Arthur J. Gallagher Stock
We analyzed Gallagher through the lens of its transformation into a dominant insurance broker combining retail, wholesale, and reinsurance capabilities.
The company is methodically integrating AssuredPartners while maintaining organic momentum across all business segments. With strong market positions in retail P&C, employee benefits, wholesale operations, and reinsurance, Gallagher has multiple growth engines firing simultaneously.
The AssuredPartners deal represents a transformational opportunity.
- Management sees $160 million in annual synergies by the end of 2026, growing to $260-280 million by early 2028.
- These synergies split roughly one-third each across revenue uplift, workforce efficiency, and operating expense reduction.
Using a forecast of 17.1% annual revenue growth and 28.7% operating margins, our model projects the stock will rise to $305 within 1.9 years. This assumes a 17.8x price-to-earnings multiple.
That represents compression from Gallagher’s current P/E of 19.8x. As the company integrates AssuredPartners and manages near-term margin dilution from the acquisition, the multiple faces some pressure.
However, the realization of synergies and continued organic growth should support gradual multiple recovery.
The real value lies in executing the integration playbook and delivering on the substantial synergies identified across revenue, operations, and technology deployment.
Our Valuation Assumptions
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Our Valuation Assumptions
TIKR’s Valuation Model lets you plug in your own assumptions for a company’s revenue growth, operating margins, and P/E multiple, and calculates the stock’s expected returns.
Here’s what we used for AJG stock:
1. Revenue Growth: 17.1%
Gallagher’s growth story centers on organic expansion supplemented by the AssuredPartners rollover.
Organic Momentum: The company delivered 4.5% organic in brokerage and 6.7% in risk management during Q3. Retail P&C grew over 7% in the U.S., while wholesale and specialty delivered 5% organic. Management expects Q4 organic growth around 5%, consistent with recent trends.
AssuredPartners Contribution: The acquisition adds immediate scale with its own 5% organic growth trajectory. Early integration results show strong sales collaboration, with $1 million in new accounts generated within six weeks of closing.
Market Environment: Global renewal premium changes remain positive (excluding property). Casualty lines continue firming with U.S. markets up 8%, while property pricing declined 5% as carrier competition intensifies.
2. Operating margins: 28.7%
Gallagher is delivering margin expansion while investing in growth and integration.
Current Performance: Year-to-date EBITDAC margins exceeded 36% with underlying expansion of 60 basis points in Q3.
Synergy Realization: The AssuredPartners integration offers a substantial margin expansion opportunity. Management expects one-third of synergies from operating expenses as Gallagher’s proven technology platform and labor arbitrage capabilities get deployed across the acquired business.
Scale Benefits: With over 71,000 employees globally and 16,000 colleagues in global centers of excellence, Gallagher maintains a structural cost advantage that drives consistent margin expansion.
3. Exit P/E Multiple: 17.8x
The market currently values Gallagher at 19.8x earnings. We assume the multiple compresses to 17.8x through our forecast period.
Reflects Integration Phase: Gallagher’s P/E has averaged 24.7x over the past year and 22.3x over 10 years. The lower multiple acknowledges near-term margin dilution from the AssuredPartners rollover and execution risk around synergy realization.
Undervalues Long-Term Potential: As integration progresses and synergies materialize, Gallagher should command a premium multiple. The company maintains market-leading positions, generates strong free cash flow, and has demonstrated consistent execution on M&A integration over decades.
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What Happens If Things Go Better or Worse?
Insurance brokers face market cycles and integration challenges. Here’s how Gallagher stock might perform under different scenarios through December 2027:
- Low Case: If revenue growth slows to 10.8% and margins compress to 20.1%, the stock still offers a 3.1% annual return.
- Mid Case: With 12.0% growth and 21.4% margins maintained through the forecast period, we expect an annual return of 9.8%.
- High Case: If AssuredPartners integration exceeds expectations and Gallagher maintains 13.1% growth with 22.3% margins, returns could hit 16.0% annually.
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The range reflects execution on the AssuredPartners integration, organic growth momentum, and insurance market dynamics.
In the low case, synergies disappoint or property market softening accelerates.
In the high case, revenue synergies from acquisition exceed expectations as cross-selling opportunities materialize faster than anticipated.
How Much Upside Does Arthur J. Gallagher Stock Have From Here?
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All it takes is three simple inputs:
- Revenue Growth
- Operating Margins
- Exit P/E Multiple
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
