Aviva share price analysis and earnings preview: buy the dip?

Aviva (LON: AV) share price has moved sideways in the past few days as focus shifts to the upcoming earnings. The stock was trading at 385.9p on Monday, a few points above last month’s low of 375p. It has dropped by 13% below the year-to-date high, signaling it has moved into a bear market.

Aviva earnings preview

Aviva, one of the biggest insurance companies in the UK, is a popular firm among income investors, thanks to the 8% dividend yield. This yield is higher than the return of UK government bonds despite the recent interest rate hikes. 

Most importantly, Aviva is a strong company with a strong balance sheet and moderate revenue and profitability growth. It also has strong credit ratings, with Moody’s, Fitch, and S&P Global having a stable outlook for the company. 

Further, Aviva has been implementing a turnaround strategy that has seen it exit some international markets. It has become a British-focused company specialising in industries like insurance and retirement solutions.

Aviva’s business did well in the first quarter as its general insurance business rose by 11% to £2.4 billion. Workplace inflows rose by 25% to £`1.8 billion while retirement jumped by £1.5 billion.

In its statement, the company estimate that its cost reductions will reach £750 million by 2024 while its cash remittance will be over £5.4 billion. It also estimated that its dividend guidance will be £915 million for the year.

Therefore, analysts expect that the business did well in Q2 amid heightened headwinds. The biggest headwind is in its Canadian business, which will be affected by the recent wildfires. It is unclear how these fires will impact the business.

The other likely catalyst for Aviva share price will be the company’s buyback policy. It recently completed the £300 million program and analysts will want to see whether a new round will be started.

Aviva share price forecast

AV chart by TradingView

The daily chart shows that the AV stock price has come under pressure in the past few weeks. It recently formed a death cross pattern when the 50-day and 200-day moving averages crossed over. The stock recently flipped the important support level at 413p, the lowest points in December and January.Aviva share price remains below all moving averages.

Therefore, the outlook for the stock is neutral ahead of the upcoming earnings. I suspect that the shares will drop to the next support level being at 375p. This view is in line with my last Aviva stock forecast.