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Aviva (LSE:AV) stock’s up 45% over the last year. It has vastly outperformed the broader FTSE 100, recently hitting its highest level in over a decade. That might all be in the past, but investors are now focused on where the Aviva share price can go from here. Here’s what the experts think.
Forecast prices
Of the 16 analysts that currently have a view on the stock, the average target price for the next year is 689p. For reference, the share price currently sits at 668p. Within that bucket, there’s a variety of views.
The team at RBC Capital are top of the tree with a target of 800p. In terms of reasoning, it said: “With the acquisition of Direct Line complete, Aviva is positioned for enhanced earnings per share growth and returns on capital, reflecting a shift towards a higher proportion of ‘capital-light’ business“.
On the other hand, analysts at Jefferies forecast 560p.
What’s interesting to note is the bunching of expectations around the current share price. This suggests that banks and brokers share a view that the strong rally in Aviva shares might be easing. Although relatively few expect the stock to fall from here, the broad expectation is for it to consolidate and tread water around current levels, with some minor gains.
My opinion
From my perspective, I’m leaning toward the stock gaining value in the coming year. H1 2025 operating profit jumped 22%, thanks to a rise in insurance premium pricing.
This didn’t include the results from Direct Line, as the acquisition was only completed at the beginning of July. However, as the company becomes integrated over the next few months, I think it could provide a further boost to the group overall. Let’s not forget that Direct Line has 3.7m motor policy customers and 4.9m non-motor clients. So the potential for driving Aviva forward is high based on these numbers alone.
The stock could also benefit from continued purchases from income investors. With a dividend yield of 5.34%, it’s easily ahead of the FTSE 100 average yield of 3.11%. With the steady operating model and dividend history, I get why people would want to own the stock just for the dividends.
One risk is a messy integration with Direct Line. Cultural challenges, the high cost of mergers, and other factors could make the deal a headache for management. This is something investors will want to watch out for. Further, the stock has a price-to-earnings ratio of 28.57. This is well above both the FTSE 100 average and also the benchmark figure of 10 that I use when looking at a fair value.
When I weigh everything up, I do agree with the consensus view that the Aviva share price could rise modestly over the coming year. But when I look at other opportunities in the stock market, I think investors could consider more juicy options for income and growth elsewhere.
