FMP
American International Group’s Price Target Increased at BofA
Jun 11, 2024 5:12 PM - Davit Kirakosyan
Image credit: FMP
BofA Securities analysts increased their price target for American International Group (NYSE:AIG) to $84 from $82, maintaining a Neutral rating on the stock. The analysts explained that the previous valuation of AIG was based on a sum-of-the-parts approach, considering the General Insurance and Life businesses separately along with the value of the deferred tax asset (DTA). Following consolidation, AIG will now be valued similarly to its large-cap P&C peers, using a forward P/E multiple of 10.6x for 2025 earnings to determine a 12-month price target of $84. This valuation approach assumes the DTA will be exhausted by the end of 2026.
The analysts acknowledged that AIG might traditionally trade at a discount compared to peers due to its trading history, shrinking reserve base, and slower premium growth. However, they believe that AIG's ongoing share repurchase efforts provide unique price support that is not observed in peer stocks, which should positively influence its near-term valuation.
Other Blogs
Oct 31, 2023 8:03 AM - Parth Sanghvi
FCFF vs FCFE: What's the Difference?
Free cash flow to the firm (FCFF) and free cash flow to equity (FCFE) are two of the most important metrics used in financial modeling. Both metrics measure the amount of cash that is available to a company's shareholders and creditors, but there is a key difference between the two. FCFF measures...
Nov 25, 2023 6:39 AM - Parth Sanghvi
DCF Valuation vs. Comparable Companies Analysis: Choosing the Right Valuation Method
Choosing the Right Valuation Method: DCF vs. Comparable Companies Analysis Introduction: Valuation methods play a pivotal role in determining the fair value of a company, aiding investors in making informed investment decisions. Two commonly used methods, DCF Valuation and Comparable Companies A...
Dec 23, 2023 2:19 AM - Parth Sanghvi
Understanding the Limitations of DCF Analysis: A Guide to Overcoming Challenges
Introduction: Discounted Cash Flow (DCF) analysis stands as a cornerstone in valuing investments, yet its efficacy is contingent upon various assumptions and methodologies. While a powerful tool, DCF analysis comes with inherent limitations and challenges that investors must acknowledge to make i...
