Aviva share price rises as Barclays points to buyback potential

on Oct 27, 2017
Updated: Mar 11, 2020

Shares in Aviva (LON:AV) have climbed into positive territory in today’s session as analysts at Barclays turned bullish on the stock, pointing to the company’s buyback potential. The comments come after JPMorgan recently noted that  shares in the blue-chip insurer are cheap and provide a good entry point

As of 14:18 BST, Aviva’s share price had added 0.32 percent to 512.65p, slightly outperforming the broader London market, with the benchmark FTSE 100 index currently standing 0.16 percent higher at 7,498.13 points. The group’s shares have added more than 14 percent to their value over the past year, and are up by more than five percent in the year-to-date.

Buyback potential

Barclays lifted its rating on Aviva from ‘equal weight’ to ‘overweight’ today, and hiked its price target on the shares from 509p to 567p. The analysts argue that the blue-chip insurer can deploy £1.5 billion of excess liquidity next year, returning proceeds from asset sales, dividends from UK life operations and ongoing cash generation. 

“We believe the combination of the acquisition of Friends Life and the asset sales in France/Spain/Asia will release significant amounts of capital, which Aviva can deploy via debt retirements and share buybacks over a number of years, while also de-risking the balance sheet,” the analysts explained, as quoted by WebFG News.

Improving earnings

Barclays further noted that the quality of Aviva’s earnings was improving, forecasting that “the difference between operating earnings and net income will narrow, with 84 percent of earnings falling to the bottom line on average 2017 through to 2022”, which, the analysts argue, should lead to book value growth.

According to MarketBeat, Aviva currently has a consensus ‘buy’ rating and an average price target of 574p. The FTSE 100 insurer is scheduled to hold its Capital Markets Day on November 30. 

As of 14:44 BST, Friday, 27 October, Aviva plc share price is 512.00p.