Morgan Stanley have cut their rating of Marsh & McLennan and Deutsche Bank has called for a break up of the company because neither can see a quick recovery from a set of lacklustre quarterly results earlier this month.
Analysts have strongly condemned the US-based financial services company, citing ‘no visibility’ and ‘reduced confidence’ in the firm.
Morgan Stanley has lowered its rating on MarshMac’s stock from overweight to equal-weight and Deutsche Bank analyst Alain Karaoglan has called for the firm to be broken up.
At the group’s quarterly results earlier this month, MarshMac’s chief executive Michael Cherkasky asked for patience as the company re-built after its involvement in a bid-rigging case. The company lost almost half its value after the scandal.
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However Morgan Stanley analyst William Wilt said, “We find ourselves with no visibility into the timing of the turnaround, and reduced confidence that the management team will effectively execute, measure or communicate the pace of the turnaround efforts.”
“We cannot recommend to investors that an overweight position in shares of MMC should be either built, or maintained,” he said.
MarshMac’s stock reached a 52-week intraday low of $24 in the first week of August, after negative reports from analysts including Bear Stearns, Goldman Sachs and Deutsche Bank.
It now stands at $25.60, and rumours have re-emerged suggesting shareholders are calling for a break up of the company, which includes Marsh insurance brokerage, Guy Carpenter reinsurance broking, Mercer consulting, Putnam asset management and corporate investigator Kroll.
Deutsche analyst Mr Karaoglan, said: “It’s absolutely the case that MMC should break up its companies. They would be worth more if they stopped hiding under Marsh Mac’s umbrella. Dependant on earnings the sum of MMC’s pieces could be $33-38 per share.”
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A spokesman for MMC said she had “nothing to add” to Cherkasky’s conference call on 3 August, when he maintained: “It is still too early in the recovery process to discount what the substantial advantages are of being one company.”
Leading securities industry newspaper, Financial News, reported this morning that major MarshMac shareholders were calling for the company to be split.