Tuesday, TD Cowen sustained its Hold rating on American International Group (NYSE:AIG) shares but reduced the price target to $80 from $83. This adjustment follows the company's second-quarter earnings release and subsequent conference call. TD Cowen's decision to lower the price target is based on revised earnings per share (EPS) estimates for the years 2024 and 2025.
The financial performance of AIG during the second quarter prompted TD Cowen to reassess its expectations for the insurance giant's future earnings. The firm's analyst cited the recent earnings disclosure as the primary reason for the updated EPS projections, leading to the adjustment of the price target.
The new price target of $80 reflects a modest decrease from the previous target of $83, indicating a more conservative outlook on the stock's potential performance. Despite this change, TD Cowen continues to advise investors to maintain their positions in AIG, as reflected in the ongoing Hold rating.
In other recent news, American International Group (AIG) has seen some adjustments to its share price targets from Jefferies and Piper Sandler. Jefferies reduced its price target to $82 from $84, maintaining a Buy rating, following a review of the company's cost savings and revenue projections. Piper Sandler also lowered its price target for AIG from $89 to $86, maintaining an Overweight rating, due to higher-than-anticipated catastrophe losses.
AIG reported strong growth in the second quarter of 2024, with a 38% year-over-year increase in adjusted after-tax income to $775 million. The company's General Insurance net premiums grew by 7%, and underwriting income reached $430 million. In addition, AIG's consolidated net investment income saw a 14% increase compared to the previous year, totaling $884 million.
Despite these positive developments, AIG also expressed caution about the potential for increased losses due to natural catastrophes in the latter half of 2024.
InvestingPro Insights
As TD Cowen revises its stance on American International Group (NYSE:AIG), investors may benefit from additional insights. According to InvestingPro, AIG's management has been actively repurchasing shares, signaling confidence in the company's intrinsic value. This aligns with the InvestingPro fair value estimate of $95.07, which is higher than the analyst consensus target, suggesting potential undervaluation.
InvestingPro data also reveals a mixed financial landscape for AIG. The company's market capitalization stands at $46.13 billion, with a Price/Book ratio of 1.04 as of the last twelve months, indicating a reasonable valuation relative to the company's book value. Despite a 16.0% revenue growth in the same period, analysts are expecting a sales decline in the current year, which may warrant caution among investors.
For those interested in AIG's dividend prospects, the company has a track record of maintaining dividend payments for 12 consecutive years, boasting a dividend yield of 2.23%. This could appeal to income-focused investors, particularly as AIG is predicted to remain profitable this year. For a more comprehensive analysis, including additional InvestingPro Tips related to AIG, investors can explore the full suite of insights at https://www.investing.com/pro/AIG.
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