On Monday, Aviva PLC (LON:AV:LN) (OTC: AVVIY) saw its share price target increased by UBS to GBP5.55 from the previous GBP5.15. The firm has maintained its Buy rating on the stock, signaling confidence in the company's financial prospects.
The adjustment in the price target, which represents an 8% increase and suggests a 19% upside from the current share price, is attributed to anticipated improvements in Aviva's financial performance. The optimism is based on the company's expectation to generate higher operating own funds, with a target of GBP1.8 billion by 2026.
UBS's revised forecast includes enhancements to Aviva's earnings per share (EPS), which are expected to rise by 10%-12%. These improvements are largely due to the company's strategic bolt-on acquisitions, which are anticipated to contribute positively to its financial metrics.
Moreover, the upgraded valuation takes into account the potential benefits arising from a "higher for longer" interest rate environment. This scenario is expected to have a favorable impact on the insurer's financial results going forward.
Aviva's focus on increasing its operating own funds generation, along with the strategic acquisitions and the macroeconomic factor of sustained high-interest rates, have contributed to UBS's decision to raise the company's price target while reaffirming its Buy rating.
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