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On Thursday, Keefe, Bruyette & Woods set a new price target for American International Group (NYSE:AIG) shares, raising the figure to $97.00 from the previous $94.00. The firm maintained its Outperform rating on the insurance giant. The adjustment followed AIG’s first quarter earnings report for the year 2025.
Meyer Shields, an analyst at Keefe, Bruyette & Woods, cited solid growth and expense reductions as the primary reasons for the optimistic outlook. Shields increased the earnings per share (EPS) estimates for the years 2025, 2026, and 2027, adjusting the figures upward to reflect AIG’s recent performance and future projections. The new EPS forecasts now stand at $6.40, $8.10, and $9.00 for the respective years, marking an increase from the prior estimates of $6.25, $7.85, and $8.65.
The raised targets are based on a variety of factors, including the first quarter’s outperformance and expectations of lower expense ratios and share counts. These positive elements are, however, partially balanced by anticipated increases in core and catastrophe loss ratios and a decrease in income from Other Operations. InvestingPro data reveals management has been aggressively buying back shares, with the company achieving a strong return over the last five years despite current short-term liquidity challenges.
Keefe, Bruyette & Woods expressed confidence in AIG’s trajectory, highlighting the company’s ongoing underwriting margin improvements, a return to premium growth, and an aggressive approach to capital return. These strategies are expected to significantly boost AIG’s earnings and, as a result, drive the stock’s performance over the next 12 months.
The new price target of $97.00 is based on a multiple of 12.0 times the firm’s estimated EPS for the year 2026. Keefe, Bruyette & Woods’ outlook reflects a belief in AIG’s ability to achieve material earnings growth, which in turn should enhance shareholder value.
In other recent news, American International Group Inc. (AIG) reported its first-quarter 2025 earnings, exceeding expectations with an adjusted earnings per share (EPS) of $1.17, compared to the forecasted $0.99. However, the company’s revenue slightly missed projections, totaling $6.8 billion against the anticipated $6.83 billion. Despite the earnings beat, the market reacted cautiously to the revenue miss. AIG continues to focus on strategic initiatives, including AI integration and international expansion, aiming for a 20%+ EPS compound annual growth rate over the next three years. The company also announced a 12.5% increase in its quarterly dividend to $0.45 per share and plans to repurchase $5-6 billion in shares this year. AIG’s net premiums written rose by 8% year-over-year, reaching $4.5 billion, supported by strategic partnerships and digital transformation efforts. The company’s core operating return on equity (ROE) reached 7.7%, with a target of exceeding 10% by the end of 2025. AIG’s management expressed confidence in their pricing strategies and underlying loss ratios, indicating a strategic focus on selective mergers and acquisitions opportunities.
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