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On Tuesday, TD Cowen reaffirmed its Hold rating on American International Group (NYSE:AIG) shares, maintaining the price target at $86.00. The stock, currently trading at $86.94, sits near its 52-week high of $87.51, having delivered an impressive 20.8% return over the past six months according to InvestingPro data. The firm’s analysis acknowledged AIG’s significant progress and transformation over the past eight years, as presented during the company’s recent Investor Day event. AIG’s management outlined expectations of continued improvements between 2025 and 2027, including a core return on equity (ROE) of 10-13% and a compound annual growth rate (CAGR) in earnings per share (EPS) exceeding 20%. InvestingPro data reveals that management has been actively supporting shareholder value through aggressive share buybacks, while maintaining dividend payments for 13 consecutive years with a current yield of 1.84%.
The financial services company is anticipated to benefit from a combination of factors, as highlighted by TD Cowen analysts. These factors include a reduction in the Global Personal Casualty/Property combined ratio (C/R), which measures underwriting profitability, as well as increased efficiencies in both expenses and capital management. Additionally, the introduction of GenAI, an innovative technology, is expected to contribute positively to AIG’s performance.
Despite the positive view on AIG’s management and the robust growth projected by the company’s financial targets, TD Cowen notes that these targets seem to align with the broader market consensus. This suggests that the growth figures, while strong, may not exceed what investors are currently expecting from AIG.
AIG’s Investor Day presentation was a key opportunity for the company to showcase its strategic plans and financial goals to investors. The management’s confidence in achieving significant growth in the coming years was evident, as they detailed the initiatives and operational changes set to drive this progress.
In conclusion, TD Cowen’s stance on AIG stock remains unchanged, with the firm recognizing both the strength of AIG’s management team and the potential industry challenges that could affect the company’s performance. The reiterated Hold rating and price target reflect the firm’s assessment of AIG’s prospects in light of these factors. According to InvestingPro’s Fair Value analysis, AIG appears fairly valued at current levels, with analysts’ price targets ranging from $76 to $96. For deeper insights into AIG’s valuation and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
In other recent news, American International Group (AIG) has announced a new $7.5 billion share repurchase program, which includes approximately $3.4 billion remaining from a previous authorization. This buyback plan is set to begin on April 1, 2025, and aligns with the company’s ambitious financial targets presented during its Investor Day. AIG aims for an Operating Earnings Per Share (EPS) Compound Annual Growth Rate (CAGR) of over 20% from 2025 to 2027 and a core operating Return on Equity (ROE) between 10% and 13% for the same period. Additionally, the company plans to increase its dividend per share at a CAGR of over 10% from 2025 to 2026.
Keefe, Bruyette & Woods analysts have maintained their positive outlook on AIG, raising the price target to $98 from $90 while reiterating an Outperform rating. They highlight AIG’s robust reserves, capital flexibility, and AI capabilities, expecting a 20%-plus EPS CAGR and significant ROE expansion. BMO Capital Markets, however, maintains a Market Perform rating with an $83 price target, adjusting their forecast for AIG’s capital returns and lowering their EPS estimates for 2026 and 2027. BMO anticipates AIG will buy back approximately $15 billion worth of shares between 2025 and 2027, which is less than their previous projection but higher than the consensus estimate.
These developments reflect AIG’s strategic focus on enhancing shareholder value through capital management and operational efficiency.
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