Aviva PLC (LSE:AV.) is in a position to make a substantial return of capital to shareholders after the completion of its disposal programme, Morgan Stanley (NYSE:MS) (MS) argues.
The insurance giant, valued at £16.1bn, has pencilled in a figure of £5bn for capital returns over 2021-22. In the meantime, the US bank noted, the excess capital position should provide some downside protection.
With the disposal programme now in the rear-view mirror, MS expects management’s focus will shift onto the potential for operational improvement in the core business.
“We see the UK intermediary platform and workplace businesses as areas where there is potential for higher operating leverage,” MS said.
The US bank has a price target on Aviva of 530p in its base case scenario; the bull case scenario sees the shares rising as high as 630p while the bear case price target is 317p.
Aviva shares currently trade at 435.5p.