Aviva Share Discussion Threads

[muscletrade] 22/2/2024 07:39

Not Fresh news here but well worth a read nonetheless...High-yielding Aviva
AV
shares have been flagged for a potential re-rating as the UK’s life insurance sector moves back into favour after nearly a decade in the doldrums.

Bank of America’s upgrade to a “Buy” recommendation comes with Aviva’s forecast yield the third highest in its coverage of more than 25 European insurers.

Based on its estimates for 2024, the shares yield dividend income of 8.4% and an all-in figure of 11% when including £300 million of annual share buybacks.

Even at the bank’s new price target of 490p, Aviva shares offer a 7.7% dividend yield compared to the sector-average 5.3%. The shares were today at 446p, broadly where they stood a year ago.

The bank’s note to clients praised the operational performance of a “more focused, disciplined” Aviva under the leadership of chief executive Amanda Blanc.

Since taking the helm in 2020, she has streamlined the business behind life and general insurance operations in the UK and property and casualty lines in Canada.

Annual results on 7 March are due to show operating profit growth within the company's 5-7% guidance range, despite challenges caused by inflation and weather-related claims.

Aviva has already flagged a dividend cost of about £915 million in 2023, the equivalent to about 33.4p a share when including a forecast final dividend of 22.3p. It then intends to grow the pay-out distribution in the region of low-to mid-single digits.

However, the lower number of shares in circulation due to annual buybacks means Bank of America sees Aviva delivering 7.3% annual dividend growth at a cost rising 4.5% a year.

Despite the progress made in recent years, the shares trade on 9.2 times 2025 earnings. At the bank’s new target price, a multiple of 10.5 times compares with the sector’s 9.7 times.

The bank said: “We think payment of the final dividend and start of the buyback (both due over the coming three months) should act as catalysts for the stock and can support re-rating.”

It added that Aviva's operational story is now a non-controversial one, and that the company should be able to deliver steady earnings growth in the UK and Canada.

The bank added: “The UK will benefit from a golden-age for the bulk annuity market, steady growth in UK protection, steady growth in UK workplace and retail savings, and strong franchises in UK and Canadian personal and casualty lines.”

In addition, sentiment in the UK life insurance sector appears to be brightening after nearly a decade blighted by low interest rates and Brexit headlines.

The uncertain economic backdrop and an inverted yield curve, where long-term interest rates are below short-term rates, have kept UK life stocks out of fashion. The transition to IFRS17 accounting standard has also been unhelpful.

The bank added: “With our strategists pointing towards a yield curve normalisation over the coming year, we think this suggests an attractive entry point for Aviva.”

A week ago, UBS upgraded its price target to 515p and said there looked to be an upside risk to the insurer’s cash generation target for the period of 2024-26.

interactive investor has just teamed up with experts at eyeQ who use artificial intelligence, macro factors and their own smart machine to generate actionable trading signals. Here’s what they say about Aviva:

“Aviva is trading off big-picture conditions as well as company news. Macro relevance is currently 80% on eyeQ’s strategic long-term model (above 65% means the macro environment is critical, so any valuation signals carry strong weight).

“The latest share price rally has taken the insurer 3.9% above where macro conditions say it ‘should’ trade. That’s not quite a big enough Fair Value Gap (difference between our model value (fair value) and where the price currently is) to trigger a signal on eyeQ’s AI framework. We need to see more like a 5% premium for that.

“But it is worth contrasting with Legal & General Group
LGEN
0.58%
, which is also a macro play (84% relevance) and which screens as 2% cheap to the big-picture environment. There may be solid company fundamental reasons for the discrepancy, but it is worth noting the divergence between the two from a purely macro perspective.”

[smurfy2001] 21/2/2024 13:05

RR. for me it's been the star but this pays a good income.

[lippy4] 21/2/2024 11:31

this seems to be the only bit of excitement in my portfolio this am..

[skinny] 21/2/2024 11:21

FWIW Bank of America raises Aviva to 'buy' (neutral) - price target 490 (485) pence

[devonbeachbum] 21/2/2024 11:20

FTSE taking a bashing but Av. Lgen and Phnx all steady as she goes, bodes well for results. Thinking the dividend chasers may have started early this year!

[whatsup32] 21/2/2024 10:30

The Times. Market report.

"Aviva was another winner up 13.5p or 3.1% after Bank of America said the insurer ""increasingly stands out"" as one of the highest yielding stocks in the sector."

[adelwire2] 20/2/2024 17:21

Very positive day

[skinny] 20/2/2024 12:18

FWIW 441.90 is the 6+ month high and looking to be breached.

[smurfy2001] 20/2/2024 11:57

Breakout territory at last!

[1robbob] 20/2/2024 11:28

Tiny turnover so far today only 1.5m shares
Price movement suggests all one-way (buy)
Looks like nobody wants to be short in front of the Results!!!

[eurofox] 20/2/2024 10:52

Just as likely that this is about property being rescued in China with large reduction in the mortgage lending rates today

[tornado12] 20/2/2024 10:23

Nice to see it break 440p...... well undervalued in last years and should be in 450-500p range. Roll on FY results in couple weeks

[cwa1] 20/2/2024 09:57

I would assume this:-



Aviva will be in Lloyd’s by the end of the year, after years of rumours hinting at the insurer's return to the marketplace, a source has told Insurance Post. Aviva exited Lloyd’s following the CGU and Norwich Union merger in 2000 and, at the time, management said the business shifted its strategy to “concentrate on leadership in personal lines and the

[devonbeachbum] 20/2/2024 08:42

Aviva to return to Lloyds by end of year - Insurance post

[cwa1] 20/2/2024 08:19

BOFA RAISES AVIVA TO 'BUY' ('NEUTRAL') - TARGET 440 (388) PENCE

[sam9092] 20/2/2024 08:15

Bank of America says best insurer in Uk is Aviva. Says undervalued !

[muscletrade] 20/2/2024 08:13

Pretty unusual start for Av this morning. Maybe an upgrade somewhere I haven't seen? The other usual suspects not doing anything although Barclays doing well on their results(not great)and their buyback news etc.

[smurfy2001] 20/2/2024 08:08

Breakout time.

[p0pper] 20/2/2024 08:05

Any news out anywhere?

[xongkudu] 19/2/2024 22:58

Ronget

I’m also concentrated on Aviva, L & G , Barclays, Lloyds and a small oil and gas high paying dividend Co.

Barclays could screw me..and I’m heavily loaded there. We’ll see tomorrow with results and restructure announcement. It could be good though and one to keep an eye on.

Good luck.