Generali hits new highs; Berenberg raises its target price to €71
The new target price is €25.60, up from the previous €45.40. In its report, the German bank has upgraded the entire European insurance sector
by Ivan Torneo
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(Il Sole 24 Ore Radiocor) - Generali surges on the Milan Stock Exchange and hits new all-time highs (Generali) approaching a trading price of around €42. For the Trieste-based company’s shares, the trend is primarily driven by the positive sentiment on the stock markets following the US-Iran agreement, with the FTSE MIB also at record levels. But the momentum was also boosted by a report from Berenberg analysts, who have raised their target prices for the continent’s leading insurance groups. In particular, the target price for Generali has been raised to €71, which is €25.6 higher than the previous €45.4.
The promotion supports the entire European sector. In Paris, Axa, in Frankfurt Allianz, whilst in Zurich Zurich Insurance Group Ag. This trend confirms the return of investor interest in the sector. The investment bank has also raised its target price for Allianz to €684 from €504, for Axa to €77.1 from €57.4, and for Zurich Insurance to 902 Swiss francs from 711 Swiss francs.
According to analysts led by Michael Huttner – who maintain ‘buy’ recommendations on all four groups – share prices ‘do not reflect improvements in business models and financial fundamentals’. The review is in fact based on the belief that the companies deserve higher multiples. Berenberg notes that “The forward price-to-earnings ratio for 2028 stands at around 20x, up from the 2028 forecast of approximately 12x, the level at which the shares are currently trading”. “The effects of changes in business models are leading to faster value creation than previously assumed,” they explain.
Among the factors identified are ‘the growing concentration of the non-life insurance market’ in Europe, as well as ‘a better allocation of capital to life insurance, which has low capital requirements and relatively high returns’. Not to mention the favourable interest rate environment – set to remain high for longer – which is helping to generate more capital. Finally, Berenberg highlights “attractive and sustainable dividend growth”, with scope also for “potential buybacks”. There is also openness to suggestions regarding M&A in the sector, with Berenberg not ruling out the possibility of “room for acquisitions and mergers”.
