On Tuesday, JPMorgan analysts revised their stance on American International Group (NYSE:AIG), downgrading the stock from Overweight to Neutral. In a contrasting move, they raised the price target to $91 from the previous $83. According to InvestingPro data, AIG currently trades at a P/E ratio of 23.15 and shows signs of being slightly undervalued based on its Fair Value analysis. The adjustment comes despite a relatively positive fundamental outlook for AIG, as the firm anticipates strong earnings per share (EPS) growth, reduced exposure to risks that commercial lines insurers face, and considerable capital flexibility.
The revision of AIG's rating was influenced by a shift in the stock's valuation, investor sentiment, and earnings forecasts since October 2024. During this period, AIG's stock price has climbed from $74.63 to $86.20, reflecting a significant outperformance in the property and casualty (P&C) sector, with AIG's shares rising 7% compared to a 3% decline in the P&C group.
Despite this positive performance, JPMorgan notes that the consensus EPS forecast for 2026 has been lowered from approximately $8.25 to $7.23. The analysts at JPMorgan believe that the recent pullback in AIG's stock price has made its valuation more attractive. However, given the stock's strong year-to-date performance, they see less compelling upside potential moving forward. With a market capitalization of $46.02 billion and a steady dividend yield of 2.06%, AIG has maintained dividend payments for 13 consecutive years, demonstrating consistent shareholder returns.
Additionally, JPMorgan's sector ratings strategy has been updated to Neutral, and within the same revision, the firm has upgraded the rating for RenaissanceRe Holdings Ltd . (NYSE:RNR), which has shown a stark contrast in performance, particularly since April 4, and has underperformed significantly year-to-date.Access the comprehensive InvestingPro Research Report for AIG to explore detailed financial analysis, peer comparisons, and expert insights that go beyond traditional market coverage.
The analysts concluded that although AIG's stock has recently become more appealing in terms of valuation, the factors that previously made the stock a standout pick are now well recognized by the market, suggesting limited room for further gains.
In other recent news, American International Group (AIG) has made several significant announcements that are capturing investor attention. UBS analyst Brian Meredith (NYSE:MDP) raised AIG's price target to $92, maintaining a Buy rating due to factors like the stabilization of consensus estimates and AIG's strategic moves, including the deconsolidation of its subsidiary Corebridge. Keefe, Bruyette & Woods also expressed optimism, increasing their price target to $98 and reaffirming an Outperform rating, citing AIG's robust reserves and innovative AI capabilities as drivers for a projected 20%+ EPS compound annual growth rate. Meanwhile, TD Cowen maintained a Hold rating with an $86 target, highlighting AIG's strategic plans and financial goals shared during the company's recent Investor Day. AIG's Board of Directors has authorized a new $7.5 billion share repurchase program, which includes $3.4 billion remaining from a previous authorization, set to commence in April 2025. The company is targeting an operating EPS CAGR of over 20% and a core operating ROE between 10% and 13% from 2025 to 2027. AIG also aims to maintain a General Insurance expense ratio below 30% and plans to increase its dividend per share at a CAGR of over 10% for 2025 to 2026. These developments reflect AIG's strategic direction and financial ambitions, as shared during its Investor Day event.
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