Bank of America Merill Lynch (BAML) and Deutsche Bank both cut their forecasts after concluding that the company’s stock has risen too much since executive chairman John McFarlane announced a radical restructuring plan in July.
“Aviva’s share price has lifted more than 40 per cent since its June lows,” said Deutsche’s Oliver Steel, who gave a “hold” recommendation.
“We remain strongly supportive of the group’s plans; however, even if these are delivered in full (which for the cost savings won’t be clear before 2014), the narrowing price-to-earnings ratio discount to the sector now leaves little room for disappointment.”
Meanwhile Blair Stewart at BAML issued a 360p target, just 17p above yesterday’s closing price and said the firm “looks fully valued”.
“Despite support from a high dividend yield, Aviva shares are relatively unattractive compared to its European composite insurer peer group.”