UPDATE: JP Morgan Upgrades Towers Watson Following Impressive 2Q14 Results

In a report published Friday, JP Morgan analyst Jeffrey Volshteyn upgraded Towers Watson (NYSE: TW) from Neutral to Overweight and raise the price target from $105 to $120. TW reported 2Q14 EPS to be on the higher end due to increased cost efficiencies. Volshteyn expects deceleration of growth in F14 but improvement in earnings potential in CY15.

According to JP Morgan, We think that TW is better positioned to compete in the larger “active” employee segment, as 35-50mln employees could be shifting to private exchanges over the next three-five years, according to mgmt and third-party sources. Given the once-a-year nature of enrollments into exchanges, TW's "active" exchange revenues will likely materialize for its 1/1/15 enrollment period (2HF15). That said, we still think that “active” exchanges are in their early stages and execution challenges for TW and its peers could be sizable once enrollments ramp up."

On Thursday, shares of Towers Watson closed at $105.01.