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On Wednesday, Goldman Sachs analyst Andrew Baker upgraded the rating of AXA SA (EPA:AXAF) (CS:FP) (OTC: AXAHY) from Neutral to Buy, setting a new price target of €44.00, increased from the previous €37.50. The upgrade comes as AXA, currently trading at $43.19 with a market capitalization of $93.91 billion, has delivered a strong year-to-date return of 21.39%. According to InvestingPro data, the stock is trading near its 52-week high, despite falling behind its peers in the EU multi-line insurance sector by approximately 15% to 20%.
AXA’s valuation appears favorable compared to its competitors across various metrics, including owner’s cash flow yield, free cash flow yield, total capital return yield, price-to-earnings (P/E), and relative P/E. With a current P/E ratio of 12.28x and an overall financial health score rated as "GOOD" by InvestingPro, these indicators suggest that AXA’s shares are trading at a discount relative to other multi-line insurance companies. InvestingPro analysis indicates the stock is currently fairly valued, with additional insights available in the comprehensive Pro Research Report.
The anticipated completion of AXA’s sale of its investment management division, AXA IM, to BNP Paribas (OTC:BNPQY) is expected to enable the insurer to initiate an additional buyback program worth roughly €3.8 billion. This buyback represents about 4.3% of the company’s market capitalization, providing further support to the stock. Adding to shareholder returns, InvestingPro data shows AXA offers a 4.07% dividend yield and has maintained dividend payments for 46 consecutive years, with a 15.04% dividend growth in the last twelve months.
The revised 12-month price target of €44 reflects a 17% increase from the prior target. Goldman Sachs has applied a 1.4x 2026E price to adjusted tangible book value (P/ATBV) multiple, up from 1.2x, which includes a slight premium over the sector average. The higher multiple is justified by several factors, including AXA’s above-average adjusted tangible book value growth, potential for excess capital return, the impending stock buyback, and the perceived higher likelihood of the company exceeding its financial targets compared to its peers. The company’s strong fundamentals are reflected in its robust financial metrics, with a current ratio of 1.93 indicating solid liquidity and a healthy balance sheet.
In other recent news, Berenberg has adjusted its outlook on AXA SA by raising the stock price target to EUR46.00, up from EUR41.50, while maintaining a Buy rating. This change is influenced by the strong financial performance of AXA, with full-year 2024 earnings surpassing consensus estimates by EUR0.1 billion, totaling EUR8.2 billion. The analysts at Berenberg attribute this robust performance to the favorable impact of a strong U.S. dollar on revenues and AXA’s appealing valuation relative to its peers in the insurance industry. Additionally, Berenberg anticipates improved revenue growth and a potential buyback in 2025 that could exceed the EUR2.8 billion forecasted by Visible Alpha consensus. Despite possible uncertainties related to France’s upcoming budget and its tax implications, AXA’s exposure to France is seen as manageable by the analysts. The raised price target also reflects a forward-looking valuation approach, considering expected financial performance through 2026. These developments highlight AXA’s strategic positioning and financial resilience in the current market landscape.
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