AVIVA (AV.) – Financials
| Price: 654p -5.6% | P/E: 29.7x |
| Market Cap: £19.9bn | Yield: 5.3% |
Insurance giant Aviva posted a positive third-quarter trading update saying it was on track to meet its 2026 financial target of £2 billion in operating profit a year earlier than planned, before any contribution from the acquisition of smaller rival Direct Line.
The firm also raised its forecast of cost synergies from the acquisition from £100 million to around £350 million and projected capital synergies of more than £500 million.
As if that wasn’t enough, it also set out new three-year targets with EPS (earnings per share) expected to rise by a compound annual rate of 11% from 2025 to 2028, ROE (return on equity) to reach around 17% this year and over 20% in 2028, and cash returns to shareholders of more than £7 billion between 2026 and 2028.
Yet the shares are down more than 5%, wiping around £1 billion off the market value.
Our View
It’s a bit of a head-scratcher but Aviva isn’t the only FTSE 100 stock to have delivered good news today and seen its shares sold off (see 3i comment).
To put the move into context, the shares were trading at multi-year highs going into this report having gained nearly 45% year-to-date so there will be an element of ‘travel and arrive’.
Make no mistake, though, Aviva is in far better shape as a business than it was a few years ago. Chief executive Amanda Blanc even went so far as to say the outlook for the group ‘has never been better’.
Read the press release here: https://www.aviva.com/investors/results-presentations-reports/
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