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On Monday, Barclays (LON:BARC) analyst Claudia Gaspari raised the price target on Aegon NV (AGN:NA) (NYSE: NYSE:AEG) shares to EUR 6.50, up from the previous EUR 6.20, while maintaining an Equalweight rating. Currently trading at $6.56 and near its 52-week high, Aegon (AS:AEGN) commands a market capitalization of $10.49 billion. The adjustment comes amid expectations of a significant increase in the company's US RBC ratio and stable UK Solvency 2 ratio. According to InvestingPro analysis, the stock shows promising momentum with several positive indicators.
Gaspari anticipates that Aegon's US RBC will climb by approximately 17 percentage points in the fourth quarter of 2024, reaching 452% from 435% in the third quarter of 2024. This increase is expected to be driven by Operating Capital Generation (OCG), favorable mark-to-market (MTM) adjustments primarily due to higher US interest rates, and an approximate 8-point contribution from equity release related to SGUL buyouts, as guided by Aegon during the third quarter of 2024. These positive factors are predicted to be partially offset by remittances.
In the UK, the analyst expects the Solvency 2 ratio to stay relatively stable at 185%, only slightly down from 186% in the third quarter of 2024. Positive OCG and minor positive MTM impacts are likely to be balanced by remittances and investments in the business.
Gaspari forecasts that Aegon's OCG, before funding and operating expenses, will reach €311 million, culminating in a full-year 2024 estimate (FY24E) of €1,235 million. This figure aligns with the company's recently upgraded guidance. Additionally, the analyst projects that Cash Capital at the Holding level will increase to €1,629 million at the end of the year, up from €1,484 million in the third quarter, primarily due to remittances of €424 million in the fourth quarter. This increase is expected to be partially balanced by funding costs and the cash outflow from the share buyback.
Furthermore, Gaspari expects Aegon to announce a final Dividend Per Share (DPS) of €0.19. With an average estimate increase of about 2% over the forecast period from FY24E to FY27E, driven by the appreciation of the USD in the quarter, the price target has been raised to €6.5 from €6.2. InvestingPro data reveals that Aegon has maintained dividend payments for 13 consecutive years and raised dividends for 4 straight years, demonstrating strong commitment to shareholder returns. With the next earnings report scheduled for February 20, 2025, and an overall Financial Health Score of FAIR, investors seeking deeper insights can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
In other recent news, Aegean Airlines has received an Overweight rating from Barclays, reflecting their confidence in the airline's business model and effective management of industry challenges. The Greek carrier's future expansion plans include the introduction of A321LR aircraft aimed at serving regions such as South Asia, the Middle East, and East Africa starting in 2026. These recent developments indicate Aegean's robust profitability track record and strategic execution.
Aegon NV, on the other hand, has been the subject of multiple analyst evaluations. JPMorgan reiterated an Overweight rating on Aegon, citing significant structural changes and increased buybacks as reasons for their positive outlook. However, Spruce Point Capital expressed concerns about the aggressive sales and recruitment tactics of Aegon's primary distribution arm, World Financial Group (WFG).
Morgan Stanley (NYSE:MS) resumed coverage on Aegon with an Overweight rating and projected a EUR1.00 increase in the price target. The firm highlighted Aegon's advantageous position in relation to current macroeconomic trends, particularly its strong earnings base in the U.S. These recent developments reflect a mixed bag of evaluations for Aegon, highlighting the dynamic and evolving nature of the investment landscape.
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