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On Wednesday, HSBC analyst Vikram Gandhi upgraded shares of American International Group (NYSE:AIG) from Hold to Buy, with a new price target set at $93, up from the previous $93. The upgrade reflects a positive outlook on the company’s recent strategic actions and the nearing completion of its corporate efficiency program, AIG Next (LON:NXT). According to InvestingPro data, AIG’s stock is currently trading at $79.85, with analyst targets ranging from $75 to $96, suggesting potential upside. The company’s shares have already delivered a solid 9.68% return year-to-date.
Gandhi noted the significant progress AIG has made in a short period, including the divestitures of Validus Re, Crop Risk Services, and its travel business, as well as the deconsolidation of Corebridge and the sale of a substantial Corebridge stake to Nippon Life. These moves have streamlined AIG’s operations and have positioned the company for a "noise-free" year in 2025 to focus on its core business. With a market capitalization of $47.38 billion, AIG stands as a prominent player in the insurance industry. InvestingPro analysis suggests the stock is currently slightly undervalued, with additional insights available in the comprehensive Pro Research Report.
The analyst highlighted AIG’s potential to expand its high-net-worth personal lines business and improve cost metrics while maintaining a low natural catastrophe (NATCAT) volatility. Additionally, the firm is expected to continue its significant share buyback program, which could further enhance shareholder value. InvestingPro data confirms management’s aggressive share buyback strategy, with the company maintaining dividend payments for 13 consecutive years, demonstrating strong commitment to shareholder returns.
The new price target of $93 represents approximately a 13% upside from the previous target of $80. The upgrade is based on the belief that AIG is nearing the end of its AIG Next program, which aimed to enhance corporate efficiency and streamline operations.
Gandhi’s outlook for AIG is optimistic, with an expectation for the insurer to showcase its core business strengths in the coming year. The focus will be on growing key areas, defending its underlying loss ratio, and executing on its capital return strategies.
In other recent news, American International Group (AIG) reported its fourth-quarter 2024 earnings, which showed an earnings per share (EPS) of $1.30, slightly beating the forecast of $1.28. However, revenue for the quarter was $6.76 billion, missing the expected $6.79 billion. Despite the revenue miss, AIG achieved a full-year adjusted after-tax income increase of 28% year-over-year. Analyst firms have varied in their outlooks: Keefe, Bruyette & Woods raised AIG’s stock price target to $90 while maintaining an Outperform rating, citing the company’s underwriting margin progress and capital return strategy. RBC Capital Markets also maintained an Outperform rating with a price target of $87, noting AIG’s strong share buyback strategy. Conversely, CFRA reduced its price target to $85 but kept a Buy rating, reflecting a valuation based on AIG’s 2026 operating earnings per share estimate. Analysts have highlighted AIG’s restructuring efforts and growth in written premiums despite challenges from divestitures. Looking forward, AIG is targeting a core operating return on equity of over 10% for 2025, with continued focus on share repurchases and capital allocation.
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