JP Morgan restarts Aviva at 'overweight', raises estimate for share buybacks
Analysts at JP Morgan restarted their coverage of Aviva at 'overweight' after it successfully completed its disposal programme, which led them to bump up their estimates for the life insurer's earnings per share and share buybacks.
The firm was proceeding rapidly with its restructuring and had now sold its operations in Europe and Asia.
In the case of Aviva's Polish business, the sales price had in fact come in ahead of their forecasts, they pointed out.
Tied to the above, JP Morgan raised its projection for share buybacks from £3bn to £4bn.
However, the analysts continued to anticipate a Solvency II ratio for Aviva of approximately 200% "to maintain some buffer and room for modelling error."
All told, they raised their earnings per share estimates for Aviva over 2021-23 by 1%, 8% and 8%, respectively.
In turn, their end-2020 target price was hiked by 8% to 510.0p
When it comes to dividends, on JP Morgan's latest estimates Aviva shares would be changing hands on an anticipated 2023 pro-forma free-cash-flow yield of more than 10%, which they termed "attractive".
For 2021, the dividend yield was pegged at 5.3%, rising to 7% in 2023, yet its shares were trading on an estimated 2023 price-to-earnings multiple of less than eight.
As an aside, also on Wednesday, analysts at RBC Capital Markets kept their recommendation for the shares at 'outperform', alongside an unchanged target price of 450.0p.