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Investing.com - Cormark downgraded iA Financial Group (TSX:IAG) (OTC:IDLLF) from Buy to Market Perform on Wednesday, while maintaining a price target of C$146.00.
The downgrade primarily stems from valuation concerns, with iA Financial now trading at 1.9x price-to-book value, representing a "relatively wide premium" to Manulife Financial (NYSE:MFC)’s 1.7x P/B ratio, according to Cormark.
The research firm also cited potential softness in iA Financial’s US Dealer Services segment as a contributing factor to the rating change, noting that slower US vehicle sales could delay a "more fulsome recovery" in this business line.
Despite the downgrade, Cormark expressed continued appreciation for several aspects of iA Financial’s business, including structural improvements in US Dealer Services, growth in US individual insurance, and the recently announced acquisition of RF Capital, which strengthens the company’s Canadian asset management business.
Cormark also highlighted iA Financial’s strong organic capital generation and remaining excess capital as positive factors for the company.
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