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Investing.com -- BofA Securities upgraded Allianz SE (ETR:ALVG) to “buy” from “neutral,” lifting its price objective to €410 from €400 as analysts cited accelerating earnings growth, robust capital strength, and significant merger and acquisition capacity, in a note dated Monday.
Shares of the German financial services company were up 1.7% at 06:22 ET (11:22 GMT).
The brokerage described Allianz as “one of the highest-quality and best-diversified names in our coverage,” forecasting a 10.5% EPS CAGR for 2024–27E and a 4.8% 2025E dividend yield that “grows in-line with earnings.” The total return potential is estimated at 21% from the current price of €348.20.
The upgrade reflects BofA’s confidence in Allianz’s operational resilience and its ability to capitalize on market cycles.
The brokerage said, “we upgrade to Buy from Neutral and increase our price objective to €410 from €400 on unchanged SOTP valuation methodology.”
Allianz’s property and casualty (P&C) operations, around 60% personal lines, are considered better positioned than peers such as AXA and Zurich, which lean more heavily toward commercial lines.
The analysts noted that “Allianz’s asset management units should see net inflows accelerate and improving AUM as rates are cut and bond yields continue to drop in the US and Europe.”
A major theme in the report is Allianz’s substantial acquisition potential. BofA estimated that “Allianz has around €10bn of M&A firepower, which could be deployed over the current 2025–27 plan period.”
The brokerage identified approximately €3 billion in unspent M&A budget from the prior plan, €4–5 billion building in the current plan, and about €1 billion per annum in debt issuance capacity.
Analysts expect bolt-on deals “could boost EPS by ~10%.” Pending asset sales, including the €2.6 billion divestment of Indian joint venture stakes announced in March 2025, could further enhance liquidity.
Allianz’s valuation metrics also remain attractive. The insurer trades at 9.7x 2027E earnings, offering a 5.4% 2026E dividend yield and a Price/Book ratio declining from 2.3x in 2023 to 1.9x in 2027.
Analysts highlighted the group’s “high visibility on earnings (thanks to Allianz’s exceptional diversification) and attractive growth (10–11% EPS and DPS CAGR 2024–27E), plus low balance sheet sensitivities to macro events.”
Financially, net earnings are projected to climb from €10.02 billion in 2024 to €12.88 billion in 2027, while reported EPS is expected to increase from €25.8 to €34.8.
Dividends per share are forecast to rise from €15.4 to €20.9, maintaining a 60% payout ratio.
The group’s return on equity is forecast at 17.5% in 2025, with free cash flow per share increasing from €20.9 to €28.9 by 2027.
BofA’s Q3 2025 preview signals continued strength, with operating profit estimated 1% above consensus, and a Solvency II ratio of about 210%, described as “higher-quality and less sensitive than many peers.”
“Allianz is well-diversified and its P&C operations well-placed given the pricing cycle,” the analysts said. “In an uncertain macro backdrop, we think Allianz’s diverse, high-quality business mix will appeal to investors.”
The report adds that “classic style never goes out of fashion,” positioning Allianz’s disciplined growth, strong balance sheet, and consistent dividend policy as foundations for sustained shareholder value.