Aviva: Upside To Consensus As We Wait Direct Line Acquisition

2025-06-15 01:38:19 ET

Aviva’s (AIVAF) (AVVIY) proposed acquisition of Direct Line holds the potential to enhance shareholder value, with management projecting an EPS uplift of approximately 15% within two years of completion. Since our last update (December 2024), the company's total return has been >40% (Fig. 1), thanks to stronger-than-expected results, and we have reached our desired target price. As a reminder, Aviva combines more than 10% operating EPS growth with a 7% increase in the dividend per share, offering a compelling total yield close to 10%. Here at the Lab, our standalone buy thesis was underpinned by three key factors: 1) the group’s geographic diversification, 2) upside potential from individual annuities and CSM expansion, and 3) a robust Solvency II capital position. Compared to L&G, the company disclosed its Q1 results update, and Aviva's trading performance was mixed....

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