Michael Zaremski, an analyst from BMO Capital, maintained the Hold rating on American International Group (AIG – Research Report). The associated price target remains the same with $83.00.
Michael Zaremski has given his Hold rating due to a combination of factors including AIG’s investor day presentation which indicated expense ratios that are better than consensus expectations. However, the details and nuances of these ratios are crucial to understanding their impact. Additionally, while BMO’s projected return on equity (ROE) for 2025-2027 ranges from 9% to 12%, AIG’s management forecasts a slightly higher range of 10% to 13%. This discrepancy suggests some uncertainty in achieving the higher end of the ROE forecast.
Moreover, BMO’s expected earnings per share (EPS) compound annual growth rate (CAGR) of approximately 21% over the next three years is slightly above AIG’s management guidance of over 20%. Despite these positive indicators, the pricing power in AIG’s primary market remains soft, which could lead to margin pressures. Additionally, AIG’s cost of goods sold trendline shows some insulation compared to peers, but the reduced protection in its policies raises concerns about future reserving. These mixed factors contribute to the Hold rating.
In another report released yesterday, Morgan Stanley also maintained a Hold rating on the stock with a $76.00 price target.
AIG’s price has also changed moderately for the past six months – from $73.230 to $86.940, which is a 18.72% increase.