Jefferies upgrades Aviva to 'buy'

(Sharecast News) - Jefferies upgraded Aviva on Wednesday to 'buy' from 'neutral' and lifted the price target by 26% to 480p as it pointed to "turning tides". The bank said it expects Aviva to deliver a best-in-class capital return yield, underpinned by a strong Solvency II ratio and the best free cash flow yield versus UK life insurance peers.

"We forecast £5.3bn of capital returns between 2023-26F, equivalent to 51% of Aviva's current market cap," it said.

"Our capital generation forecasts for 2025F (£1.69bn) are 10% ahead of consensus largely driven by our more positive outlook in General Insurance (GI)."

Jefferies said earnings should start to shift towards capital-light business, which is well-timed given improving market conditions, and should warrant a premium valuation versus peers.