On Thursday, CFRA, a notable financial research firm, updated its outlook on American International Group (NYSE:AIG), increasing the stock's price target from $87.00 to $90.00. The firm has maintained a Buy rating on the shares, which currently offer a 2% yield.
The adjustment in the price target reflects a valuation of 12.2 times CFRA's projected operating earnings per share (EPS) for 2024, which stands at $7.35, and 10.9 times the 2025 EPS estimate of $8.22. This revision follows AIG's recent announcement regarding the sale of a 20% stake in Corebridge Financial, Inc. to Nippon Life at $31.47 per share, amounting to a total deal value of $3.8 billion. The transaction is expected to be finalized in the first quarter of 2025.
CFRA has expressed support for the sale, viewing it as a positive step in AIG's ongoing restructuring efforts. The goal of the restructuring is to pivot the company's focus towards a business model concentrated on property-casualty operations.
As of the end of 2023, AIG held a 52.2% interest in Corebridge. The recent sale is a significant move towards reaching the company's target of reducing its Corebridge holdings to approximately 10%, with the anticipation of further transactions in the future.
The firm notes that AIG's shares are currently trading at a multiple of 9.7 times CFRA's 2025 EPS estimate, which is considered undervalued when compared to the forward multiple of around 14 times that is typical for the property-casualty peer group. CFRA believes that AIG's restructuring efforts will act as a catalyst to narrow this valuation gap.
InvestingPro Insights
Following CFRA's optimistic outlook on American International Group (NYSE:AIG), current metrics from InvestingPro further enrich the narrative for potential investors. AIG's management has been actively engaging in share buybacks, signaling confidence in the company's prospects. This aligns with the firm's high shareholder yield, which is an attractive feature for investors seeking returns. Moreover, AIG has demonstrated resilience by maintaining dividend payments for 12 consecutive years, a testament to its financial stability.
InvestingPro data shows AIG with a market capitalization of $52.4 billion and a P/E ratio of 11.72, which is adjusted to 11.18 for the last twelve months as of Q1 2024. Despite a slight revenue decline of 4.02% over the last twelve months, the company's quarterly revenue growth stands at a robust 15.43% for Q1 2024. These financials underscore AIG's ability to generate profits, as evidenced by the analysts' prediction of profitability for the year.
To gain deeper insights and additional InvestingPro Tips, such as the significance of AIG trading near its 52-week high and its status as a prominent player in the insurance industry, interested readers can visit https://www.investing.com/pro/AIG.
There are 9 more InvestingPro Tips available that can provide a more comprehensive understanding of AIG's financial health and market position. For those considering an InvestingPro subscription, use the coupon code PRONEWS24 to receive an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.