Jefferies Revises Allianz Rating to "Hold"

Jefferies has adjusted its rating for Allianz (ETR:ALVG) SE from "buy" to "hold." This change is attributed to the company's growth objectives and its robust stock performance.

Growth Targets

Analysts highlighted Allianz's new plan targeting an annual earnings per share growth of 7% to 9%, an acceleration from previous goals. This objective is consistent with market expectations and has been incorporated into the current stock valuation, which is now priced at a premium compared to historical levels.

Stock Performance

Allianz's share price has seen a 23% increase over the past year, driven by strong results in the first half of 2024. The stock is currently trading at a price-to-earnings ratio exceeding 11 times its projected 2025 earnings, which is significantly higher than the 20-year average of 8.8 times.

Price Target Adjustment

Jefferies has slightly raised its price target from €310 to €325 to account for higher earnings forecasts but cautioned that there is limited upside from the current price levels.

Capital Return Policy

The analysts also noted a change in Allianz's capital return strategy, with the insurer intending to allocate a minimum of 15% of its net income to share buybacks from 2025 to 2027. This move aligns Allianz with competitors like AXA, but Jefferies indicates it does not substantially change their outlook on the stock.

Valuation Concerns

Despite Allianz's promising growth outlook, Jefferies expressed concerns about the stock's valuation, suggesting that the recent rise limits the potential for further gains. While the company’s diverse portfolio and operational strengths are appealing, the current share price already reflects these advantages.