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On Wednesday, BNP Paribas (OTC:BNPQY) Exane analyst Iain Pearce upgraded Aegon NV (NYSE:AEG) shares from Neutral to Outperform, while also adjusting the price target to €6.40 from the previous €6.60. Currently trading at $6.64, Aegon (AS:AEGN) has shown resilience with a 12.73% year-to-date return. The firm’s full-year 2024 results did not deliver the anticipated upgrades, and the surprises that emerged were negative in nature. Despite maintaining a healthy 5.1% dividend yield, the expected increase in capital returns did not materialize, adding to the company’s challenges.
According to InvestingPro analysis, Aegon appears undervalued based on its Fair Value estimates. The platform reveals 8 additional key insights about the company’s financial health and growth prospects.
Pearce noted that market conditions, including both equity and foreign exchange markets, have not been favorable. He pointed out that Aegon’s significant exposure to the U.S. market adds a higher level of risk to its shares. With a market capitalization of $10.74 billion and a P/E ratio of 16, the analyst’s expectations are now more aligned with the company’s guidance, rather than anticipating further upgrades.
Despite the reduction in the price target and the acknowledgment of increased risk, Pearce believes that the recent underperformance of Aegon’s shares has created an opportunity for value. The decision to upgrade the stock to Outperform reflects this perspective.
The new price target of €6.40 takes into account the rise in the value of ASR shares, which is seen as a positive aspect for Aegon. While the downgrade in the price target suggests a more conservative outlook, the upgrade in stock rating from Neutral to Outperform indicates a positive shift in the firm’s assessment of Aegon’s potential.
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