First-half results beat Credit Suisse estimates. The broker is cautious about whether the business will still hit the upper end of its guidance range for the full year.
This requires an allowance for expense savings in the second half and steady assumptions of peril and investment income. The broker increases FY19 net profit estimates by 11% to incorporate the beat to forecasts.
As the stock has outperformed the market in the last four months and there is some earnings risk emerging into the second half, the broker downgrades to Neutral from Outperform. Target is raised to $7.80 from $7.65.
Sector: Insurance.
Target price is $7.80.Current Price is $7.61. Difference: $0.19 – (brackets indicate current price is over target). If IAG meets the Credit Suisse target it will return approximately 2% (excluding dividends, fees and charges – negative figures indicate an expected loss).
