Arthur J. Gallagher (AJG), an insurance brokerage and risk-management company, may face near-term margin pressure as it works to integrate its $13.8 billion AssuredPartners acquisition, Oppenheimer said Wednesday in a report.

Gallagher's distribution model and scale should support long-term growth, though integration-related costs and structural headwinds may limit margin expansion over the next few years, the report said.

Mergers have become a key growth driver for Gallagher as it shifts to a broader platform strategy from frequent small "tuck-in" deals, the report said. The company's ability to generate about 5% to 6% organic revenue growth provides a recurring base, helped by new business, client retention, exposure growth and cross-selling, Oppenheimer said.

Organic growth is likely to moderate as commercial insurance pricing cools into 2028, Oppenheimer said. Still, maintaining mid-single-digit organic growth may help the company hold or expand adjusted EBITDA margins over time, the report said.

Oppenheimer initiated coverage of Gallagher stock with a perform rating.

Price: 227.71, Change: -2.14, Percent Change: -0.93