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At 644p, Aviva‘s (LSE:AV.) share price has been one of the FTSE 100 star performers in 2025. It’s lost some ground in recent sessions, but remains roughly 36% higher than it was on 1 January.
The financial services company faces significant challenges, like persistently weak market conditions in the UK and intense competition. Yet City analysts are confident Aviva shares will rebound.
Today 13 analysts have ratings on the financial services provider, providing a healthy range of opinions. Encouragingly, the average 12-month share price target among this grouping is 678.4p per share.
One particular fan of the stock thinks the shares will hit 760p over the next year. That represents an 18% premium to today’s price.
It’s critical to remember that broker forecasts often overshoot or undershoot what actually happens. However, I believe Aviva’s share price can hit the City’s most ambitious target.
Want to know why? Here are three reasons.
1. Attractive valuation
One reason behind the FTSE 100’s surge this year has been rocketing demand for underpriced, quality stocks.
Despite Aviva’s strong price gains this year, it’s a category the company still fits firmly inside, in my opinion. This could leave scope for further strength in the months ahead.
The UK company has a forward price-to-earnings (P/E) ratio of 11.9 times. That’s lower than the 14 times than the broader European insurance sector currently boasts.
Furthermore, Aviva’s forward dividend yield is 6%, better than its peer group average of 3.9%.
2. More cash rewards
Aviva generates enormous amounts of cash. It uses a portion of this to make growth-boosting acquisitions like that of Direct Line, and to invest elsewhere in the business.
However, its priority is to return significant sums to its shareholders through a rising dividend and share buybacks. This year Aviva raised the interim dividend 10% year on year.
City analysts think Aviva will keep splashing the cash for shareholders, a scenario which could drive shares sharply higher. Annual dividends are tipped to keep rising through to 2027 at least.
What’s more, share buybacks are expected to return next year (they were suspended in 2025 owing to the Direct Line takeover).
As I’ve mentioned, Aviva’s profits are highly sensitive to the broader economic landscape.
Okay, demand for essential products like car insurance remain rock-solid even duting downturns. But asset management and other discretionary services can suffer badly when consumers feel the pinch.
These remain risks going forwards. However, my fears are soothed (if not totally eliminated) by Aviva’s robustness during the current tough period. And the company could receive support if interest rates continue falling over the next 12 months.
This month, Aviva raised its operating profit target for 2025 to £2.2bn. It had previously tipped profits of £2bn by next year.
The company also raised its medium-term targets, underlining its confidence further out. Operating earnings per share (EPS) growth is now put at 11% between 2025 and 2028.
I’m confident Aviva can hit these targets, supported by demographic factors (ie an ageing population), and continue growing its share price.
