Aviva (LON: AV.) share price will be in the spotlight as the British insurer publishes its trading statement for the third quarter. The stock has crawled back after bottoming at 363p in September and is now trading at 404p. This price is a few points below the year-to-date high of 431p.
Aviva’s recent headlinesAviva is one of the biggest British insurance companies that offers numerous services to both retail and institutional investors. The company, under Amanda Blanc, has gone through numerous changes.
The biggest change is that it has exited some non-core markets by selling some of its international markets. What has remained is a company that has a strong market share in the UK, Canada, and Ireland.
Selling its international businesses has made it a lean company. It has also led to more returns to investors through dividends and share repurchases. In the last quarter, the company hiked its dividend payout by 8% and announced a new £300 million buyback.
Aviva has also made several headlines this year. As I wrote recently, the company was rumoured to be a takeover target, with Allianz being the key acquirer. The Times also mentioned several other companies, including an American insurance company as a potential acquirer.
Aviva and the other companies have not confirmed these M&A rumours. However, some analysts believe that the company would be a good target because of its market share and the fact that it is one of the most undervalued insurance companies.
However, a bid by Allianz could attract regulatory scrutiny because the German insurer also owns LV, a British insurer. Also, Aviva might reject a deal that seems to undervalue its business.
Aviva has also made other headlines recently. It acquired AIG’s life insurance business in a $563 million deal. It has also expressed interest of acquiring a company in the commercial insurance sector.
The next important catalyst for Aviva share price will come out on Wednesday when the company publishes its financial results. These results are expected to be in line with expectations, meaning that it will show no major growth.
In the most recent results, Aviva said that its underlying profits jumped by 24% while operating profit soared by 35% to £2.2 billion. It also maintained a capital position of about 212%, which is strong in a volatile market.
Aviva seems like a good investment to me. It has a good management that is executing well. And most importantly, it has a dividend yield of 7.95%, which is a good one for income-focused investors.
Aviva share price forecast
The daily chart shows that the AV stock price has been in a slow bullish trend after it bottomed at 354p on March 20th. The shares have moved above the 50-day and 100-day Exponential Moving Averages (EMA).
Further, the two lines of the MACD indicator have moved above the neutral point. Also, the Relative Strength Index (RSI) sits at 60. Therefore, the outlook for the stock is bullish, with the next reference point being at 431p, the highest point on March 9th. This price is about 5.31% from the current level.
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