On Monday, Keefe, Bruyette & Woods maintained its Outperform rating and $87.00 price target for American International Group (NYSE:AIG) shares. The firm's stance follows AIG's recent announcement on Thursday regarding the sale of an additional 30 million shares of Corebridge Financial Inc. (CRBG). This transaction reduces AIG's pro forma ownership to approximately 48.4%, or 47.6% when accounting for the 4.5 million share overallotment.
The firm has adjusted its earnings per share (EPS) estimates for AIG for the years 2024 and 2025. The new forecast sets the 2024 EPS at $6.95, up from the previously projected $6.80, and the 2025 EPS at $6.85, down from the prior estimate of $6.95. The revisions reflect changes in AIG's ownership stake in CRBG, which is now lower for 2025 than previously modeled.
AIG's divestiture of CRBG shares is part of its ongoing strategy to streamline its operations and focus on its core insurance business. The sale is expected to impact the company's future earnings and ownership structure. Despite this, Keefe, Bruyette & Woods anticipates improved underwriting and investment income to propel AIG's stock performance over the next twelve months.
The firm's analysis suggests that these factors, along with the strategic sale of CRBG shares, position AIG favorably for future growth. The reaffirmed $87.00 price target indicates confidence in the stock's potential to appreciate in value within the given timeframe.
Investors and market watchers will be observing AIG's progress closely, particularly in terms of its underwriting performance and investment returns, as these are key drivers identified by Keefe, Bruyette & Woods for the stock's projected upward movement.
InvestingPro Insights
As American International Group (NYSE:AIG) continues to refine its business strategy, real-time data from InvestingPro provides a comprehensive view of the company's financial health. With a market capitalization of $51.43 billion and a price-to-earnings (P/E) ratio at 11.58, AIG shows a valuation that could attract investors looking for reasonably priced earnings potential. Moreover, the company's P/E ratio has slightly adjusted to 11.02 over the last twelve months as of Q1 2024, hinting at a consistent earnings outlook.
InvestingPro Tips spotlight AIG's proactive management, which has been aggressively buying back shares, and the company's high shareholder yield. These moves suggest a focus on enhancing shareholder value. Additionally, AIG has maintained dividend payments for 12 consecutive years, with a recent dividend yield of 2.03% and a significant dividend growth rate of 25.0% in the past year. Such a track record can be appealing to income-focused investors.
While six analysts have revised their earnings downwards for the upcoming period, it's worth noting that AIG remains a prominent player in the insurance industry, and analysts predict the company will be profitable this year. For those interested in exploring further insights and metrics, InvestingPro offers additional tips on AIG, which can be accessed with a special offer: use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. There are 5 more InvestingPro Tips available that could provide investors with a deeper understanding of AIG's market position and performance prospects.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.