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BMO Capital has adjusted its outlook on American International Group (NYSE: NYSE:AIG), increasing the price target from $87.00 to $90.00 while keeping an Outperform rating on the stock.
The adjustment follows a series of structural transactions that have prompted a revision of the company's financial projections.
The firm's analyst noted the decision to raise the target price to $90 comes after fully incorporating the benefits from AIG's utilization of deferred tax assets and the proceeds from Corebridge sell-downs into their core operating book value forecast.
The analyst highlighted that AIG's shares are currently trading at approximately 1.0 times book value, which includes Corebridge and deferred tax assets, in contrast to its peers, which trade above 1.6 times book value.
BMO Capital has also recently revised its estimates for catastrophe losses to be higher than the consensus. The analyst suggests that the consensus may soon be adjusted to reflect the impacts of Hurricane Helene.
In other recent news, American International Group (AIG) has experienced several adjustments to their stock price targets following their second-quarter earnings release. HSBC reduced AIG's price target to $82 while maintaining a Hold rating, citing an analysis of the insurer's financial targets and operational strategies. Deutsche Bank, Jefferies, and TD Cowen also adjusted their price targets to $86, $82, and $80 respectively.
These revisions came in the wake of AIG's announcement of a 38% year-over-year increase in adjusted after-tax income to $775 million in the second quarter of 2024. The company's General Insurance net premiums grew by 7%, and underwriting income reached $430 million. AIG's consolidated net investment income also saw a 14% increase, totaling $884 million.
In addition to financial updates, AIG appointed Keith Walsh as its new Executive Vice President and Chief Financial Officer, effective from October 21, 2024. Walsh brings over 25 years of experience in finance leadership within the financial services sector.
InvestingPro Insights
To complement BMO Capital's analysis, InvestingPro data reveals that AIG's market capitalization stands at $46.58 billion, with a price-to-book ratio of 1.05 as of the last twelve months ending Q2 2024. This aligns closely with the analyst's observation of AIG trading at approximately 1.0 times book value.
InvestingPro Tips highlight that AIG has maintained dividend payments for 12 consecutive years, demonstrating a commitment to shareholder returns. This could be an attractive feature for investors, especially given the company's current dividend yield of 2.21%.
Another relevant InvestingPro Tip notes that management has been aggressively buying back shares. This strategy, combined with the dividend history, suggests a focus on enhancing shareholder value, which could support the potential for a "relief rally" mentioned in the BMO Capital analysis.
For investors seeking a deeper understanding of AIG's financial position and future prospects, InvestingPro offers 7 additional tips, providing a more comprehensive view of the company's strengths and challenges in the insurance industry.
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