Jefferies has raised its price target for shares in Aviva PLC (LSE:AV.) after the latter's strategic update, which gave the US investment bank several reasons to be upbeat.
Jefferies has taken its valuation to 525p from 490p (current price 482p) and maintains its 'buy' recommendation.
In a research note out Monday, Jefferies noted that Aviva has set ambitious targets for 2026, aiming for £2 billion in operating profit and £1.8 billion in Solvency II own funds generation.
These goals are deemed achievable, driven by growth in general insurance (GI) and enhanced by recent M&A activities, as well as the release of the contractual service margin in Aviva's life business, providing a stable earnings source.
Aviva's capital position remains robust, with a Solvency II ratio reported at 207% for 2023, slightly above expectations, Jefferies said.
This strong financial foundation has enabled Aviva to upgrade its dividend guidance to mid-single-digit cash cost growth and announce a £300 million buyback, the bank noted.
Analysts also forecast a £400 million buyback per annum between 2024-26, indicating an attractive total return yield in the sector for 2024F at 10.5%.