I’ve been watching the Aviva (LSE: AV.) share worth carefully, and it’s been doing one thing odd in the previous couple of months.
As I write forward of the market opening on Wednesday (23 September), the inventory is up 78.6% to 706p. Nevertheless, it hasn’t been all easy crusing for traders with the shares leaping round all through 2026. That features a 3% decline previously month.
Regardless of that, many analysts stay optimistic on the inventory with consensus estimates implying additional potential worth rises from right here. So, what’s actually happening with the monetary providers group and will the inventory be set to soar in 2027?
What’s actually occurring with Aviva
The present 706p share worth isn’t far off the 52-week excessive of 740.6p and close to ranges final seen in 2007.
Robust outcomes have been a key driver of share worth efficiency over the past 12 to 18 months. This consists of first-half 2026 working revenue leaping 24% to round £1.3bn, with earnings per share up roughly 10% in excellent news for shareholders.
Administration pointed to UK normal insurance coverage efficiency and the Direct Line Group integration as key drivers of the profitable outcome. However does the earnings case nonetheless stack up?
Crunching the numbers
Whereas analyst 12-month worth targets differ, and the consensus is sitting round 729p as I write, some are extra bullish than others.
Take Berenberg for instance. Analysts protecting the inventory estimate Aviva affords a potential money yield of 9% from its 2027 income, and forecast annual dividend development of 6.5% by way of to 2028.
This, mixed with a dominant and rising place in UK property and casualty insurance coverage, alongside robust forecast development in UK retirement financial savings, has underpinned an 820p worth goal for the inventory.
That suggests 16.1% share worth development from present ranges, earlier than accounting for any potential will increase in dividends.
Among the different key takeaways from the Berenberg protection have been:
- UK normal insurance coverage accounts for roughly 40% of group working revenue, with market share expanded from 10% to 17% over six years.
- The corporate manages round 20% of UK office pension belongings, a scale place in a roughly £850bn annuities market.
- Cumulative money remittances of almost £7.1bn are forecast between 2026 and 2028.
The dangers value weighing
The value-to-earnings (P/E) ratio of round 38.6 seems wealthy in opposition to historic insurer norms, though this isn’t essentially the perfect measure for monetary providers teams.
Insurers like Aviva usually profit from increased charges, so any shift in Financial institution of England expectations might unsettle the shares within the quick time period. The UK normal insurance coverage market additionally stays fiercely aggressive, and regulatory modifications can rapidly impression on the anticipated development trajectory.
My verdict
I don’t at the moment personal the inventory, however I believe the mixture of a 5.7% dividend yield and mid-single-digit development might see it push in direction of the 820p higher worth goal in 2027.
The latest dip feels extra like a pause than a breakdown, and I believe it’s value contemplating by traders which might be prepared to take a view on rates of interest and are searching for a robust dividend inventory so as to add to their portfolios.
It’s removed from the one earnings inventory that has caught my eye, and there are different alternatives that I believe deserve extra consideration proper now…
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Ken Corridor doesn’t personal shares in any of the businesses talked about.
