BMO maintains AIG stock at Market Perform with $83 target

Tuesday, BMO Capital Markets maintained their Market Perform rating on American International Group (NYSE:AIG) shares, keeping the price target steady at $83.00. The decision follows a detailed review of the insurance giant’s capital management plans, leading to revised expectations for share buybacks and return on equity (RoE). AIG currently trades at $84.57, near its 52-week high of $84.29, with InvestingPro data showing the stock is slightly undervalued based on its proprietary Fair Value model.

The firm’s analysts, led by Michael Zaremski, adjusted their forecast for AIG’s capital returns, now anticipating a lower RoE of approximately 11.6% for the year 2027, down from the previously estimated 13%. This adjustment is largely due to a scaled-back projection for share repurchases over the next few years. As a result, BMO Capital’s earnings per share (EPS) estimates for AIG have decreased by 4% for 2026 and 7% for 2027, landing at $7.66 and $8.83, respectively. InvestingPro data reveals that seven analysts have recently revised their earnings estimates downward, though the company maintains a solid P/E ratio of 22.78.

The revised calculations suggest that AIG will buy back around $15.0 billion worth of shares cumulatively between 2025 and 2027, which is less than the earlier projection of approximately $17.8 billion. It is important to note that this new estimate is still higher than the consensus, which is around $12.5 billion.

Zaremski pointed out that their estimates do not account for a significant margin for mergers and acquisitions (M&A) activities, although AIG’s management has increasingly been discussing M&A as a factor in their capital strategy in recent quarters. The ongoing adjustments in capital allocation strategies by AIG’s management indicate a careful approach to balancing shareholder returns with strategic investment opportunities.

In other recent news, American International Group (AIG) has been the focus of several analyst updates and financial assessments. HSBC upgraded AIG’s stock rating from Hold to Buy, raising the price target to $93, citing the company’s strategic actions and the nearing completion of its AIG Next (LON:NXT) program. Keefe, Bruyette & Woods also adjusted their outlook, increasing the price target to $90 and maintaining an Outperform rating, highlighting AIG’s solid premium growth and aggressive capital return strategy. Meanwhile, BMO Capital Markets raised AIG’s price target to $83, maintaining a Market Perform rating, and emphasized the company’s roadmap to achieve a 13% core return on equity by 2027.

RBC Capital Markets reiterated an Outperform rating with an $87 price target, noting AIG’s robust share buybacks and solid underwriting performance in the fourth quarter. CFRA, however, reduced the price target to $85 while maintaining a Buy rating, reflecting on AIG’s recent earnings and ongoing restructuring efforts. AIG’s recent earnings report revealed a fourth-quarter EPS slightly above consensus estimates, with General Insurance and Commercial Lines written premiums showing growth despite revenue declines from divestitures. Analysts have pointed out that AIG’s strategic moves, including divestitures and share buybacks, are positioning the company for future growth and profitability.

These developments reflect a mixed but cautiously optimistic sentiment among analysts about AIG’s financial strategies and market position. As AIG continues to focus on its core business and execute its strategic initiatives, investors will be watching closely for further updates.

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