Aegon Shares Rise Following UBS Upgrade

Shares of Aegon (AS:AEGN) inched up on Tuesday after UBS upgraded its rating on the stock from "neutral" to "buy."

Analyst Optimism on Capital Returns

The revision comes as UBS analysts expressed optimism about the company's capital return potential, particularly regarding upcoming share buybacks.

> “We expect Aegon to continue to execute share buybacks over the long-term (UBSe: €300m recurring share buybacks from 2025 onwards),” said UBS analysts. This would yield around 9%, aligning with Dutch peers but exceeding the broader sector average.

Potential for Special Buyback

The brokerage also indicated that a special buyback program worth approximately €100 million could be announced with the company's third-quarter results on November 15, building on the current €200 million buyback expected to complete by mid-December.

Aegon’s Capital Flexibility

UBS highlighted Aegon's flexibility with excess capital, particularly its 30% stake in ASR, a Dutch insurer. If compelling deal opportunities do not arise, Aegon could return this capital to shareholders.

However, UBS cautioned against selling the ASR stake to fund a buyback, as it may not be beneficial based on current valuations.

De-risking Non-Core Assets

The potential de-risking of Aegon’s non-core U.S. assets could also unlock additional shareholder value. Although lower U.S. interest rates might reduce these asset valuations, reducing risk could act as a positive catalyst.

UBS slightly lowered its price target for Aegon to €6.55 from €6.65 due to a decrease in the valuation of both the ASR stake and U.S. non-core assets. Despite this adjustment, analysts remain bullish on Aegon’s long-term prospects and capital return strategy, maintaining their "buy" recommendation.