Piper Sandler has adjusted its price target for American International Group (NYSE: NYSE:AIG) shares, bringing it down to $86.00 from the previous figure of $89.00. Despite the reduction, the firm maintained its Overweight rating on the insurance giant's stock.
The revision comes after AIG reported a quarter that fell short of expectations, primarily due to higher-than-anticipated catastrophe losses. These losses were particularly significant on an international level, impacting the company's financial performance for the period.
Piper Sandler noted that the comparison of the quarterly results with past performance and projections is now more challenging. This complexity arises from the recent deconsolidation of AIG's life operation, a structural change in the company's business.
Excluding the impact of the catastrophe losses, AIG's results were largely in line with what Piper Sandler had forecasted.
AIG reported significant growth in its second quarter of 2024, with the company's adjusted after-tax income saw a 38% year-over-year increase, reaching $775 million. AIG's General Insurance net premiums grew by 7%, with underwriting income reaching $430 million.
Meanwhile, the consolidated net investment income increased by 14% compared to the previous year, amounting to $884 million. AIG returned nearly $2 billion to shareholders through stock repurchases and dividends.
InvestingPro Insights
Following Piper Sandler's adjustment of the price target for American International Group (NYSE:AIG), a closer look at real-time data and InvestingPro Tips can provide additional context for investors. Despite the setbacks from catastrophe losses, AIG's management has been actively buying back shares, demonstrating confidence in the company's value and prospects. This aligns with the Overweight rating maintained by Piper Sandler, as share buybacks can be indicative of undervaluation.
Moreover, AIG has been a prominent player in the insurance industry with a history of maintaining dividend payments for 12 consecutive years. The company's commitment to returning value to shareholders is further underscored by a high shareholder yield. Current real-time data from InvestingPro shows that AIG has a market capitalization of $48.68 billion, a Price to Earnings (P/E) ratio (adjusted for the last twelve months as of Q1 2024) of 10.37, and a dividend yield of 2.14%. These figures, particularly the P/E ratio, suggest that AIG is trading at a reasonable valuation compared to earnings, which may be attractive to value-oriented investors.
While analysts have revised earnings downward for the upcoming period and anticipate a sales decline in the current year, the company has been profitable over the last twelve months, and profitability is expected to continue this year. For those interested in a deeper analysis, InvestingPro offers additional tips and metrics to help investors make informed decisions. There are currently 9 more InvestingPro Tips available for AIG, which can be explored for a comprehensive understanding of the company's financial health and market position.
With an InvestingPro fair value estimate slightly above Piper Sandler's price target, at $86.81, investors may find reassurance in the potential upside for AIG's shares. The InvestingPro platform provides a valuable tool for those seeking to delve into the intricacies of AIG's financials and market expectations.
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