Analysts at JPMorgan remain bullish on Aviva (LON:AV), arguing that shares in the blue-chip insurer are cheap and provide a good entry point. The comments came as Moody’s lifted the FTSE 100 group’s credit rating.
Aviva’s share price has been steady in London this morning, having inched 0.17 percent higher to 503.85p as of 10:28 BST, slightly outperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.01 percent lower at 7,523.40 points. The group’s shares have added more than 13 percent to their value over the past year, and are up by some three percent in the year-to-date.
JPMorgan bullish on Aviva
JPMorgan reiterated its ‘overweight’ rating on Aviva yesterday, while trimming their price target on the shares from 624p to 617p. Sharecast quoted the analysts as arguing that the group’s shares are cheap following four-percent underperformance of the wider sector since July and trading on 8.3 times’ the broker’s earnings estimates for 2019, offering a good entry point.
In particular, JPMorgan noted that the blue-chip insurer’s cash flows over the next three years would suffice to increase the dividend at a compound annual rate of 10 percent between 2017 and 2019, carry out a £300-million share buyback each year and cut its net debt by £1.1 billion in the coming three years.
The comments come after Aviva recently announced that it is exiting its business in Taiwan.
Moody’s lifts credit rating
In a separate development, the FTSE 100 insurer announced yesterday that Moody’s had lifted its rating by one notch to Aa3. The group’s chief financial officer Tom Stoddard called the move ‘an important milestone’ for the company, saying that it recognised the group’s “significant progress in recent years to strengthen Aviva’s balance sheet”.