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magazineThree reasons there could be more upside at Aviva
Aviva (AV.) 419p
Gain to date: 36%
Original entry point: Buy at 301p, 17 September 2020
Given the 36% return to date on our buy call on Aviva (AV.) investors may be tempted to lock in profits. However we believe that the share price has further to run and continue to be positive on the shares.
This positive stance is based on three factors.
First, Cevian Capital a Stockholm based activist investor disclosed a 4.95% holding in Aviva in June. Having proved successful in its push for a big return of capital from the proceeds generated by non-core business sales, Cevian looks set to hold management’s feet to the fire on costs.
Second, at the recently announced first half results Aviva announced, as discussed, its intention to return £4 billion to shareholders. According to analysts at JP Morgan this is likely to act as a catalyst for a re-rating of the stock moving forward.
Third, the potential disposal of the Aviva Investors division could also crystallise some value. There are two reasons to believe this may be a possibility.
The unit is peripheral to the group’s overall profitability and the majority of clients are in house.
SHARES SAYS: Still a buy.
Important information:
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Investors acting on the information in these articles do so at their own risk and AJ Bell Media and its staff do not accept liability for losses suffered by investors as a result of their investment decisions.
