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Investing.com — Shares of Aegon (AS:) inched up on Tuesday after UBS upgraded its score on the inventory to “purchase” from “impartial.”
The revision comes as UBS analysts expressed optimism concerning the firm’s capital return potential, significantly in gentle of upcoming share buybacks.
“We count on Aegon to proceed to execute share buybacks over the long-term (UBSe: €300m recurring share buybacks from 2025 onwards),” stated analysts at UBS, which would offer an all-in yield of round 9%, in step with Dutch friends however above the broader sector common.
The brokerage additionally instructed that there’s room for a particular buyback program price round €100 million, which might be introduced as quickly as the corporate’s third-quarter outcomes are launched on November 15.
This program would construct upon the present €200 million buyback, which is predicted to conclude by mid-December.
UBS identified that Aegon has flexibility with its extra capital, significantly its stake in ASR, a Dutch insurer during which Aegon holds a 30% share.
If no compelling deal alternatives come up, Aegon may return this capital to shareholders.
Nonetheless, UBS was cautious a couple of potential sale of the ASR stake to fund a buyback, noting that it may not be accretive primarily based on present valuations.
The potential de-risking of Aegon’s non-core U.S. belongings was additionally highlighted as an element that would unlock further shareholder worth.
UBS famous that whereas U.S. rates of interest are decrease, which could dampen the valuations of those belongings, any transfer to cut back danger may act as a optimistic catalyst.
UBS lowered its worth goal for Aegon barely to €6.55 from €6.65 as a consequence of a downward revision within the valuation of each the ASR stake and U.S. non-core belongings.
Regardless of this, the analysts stay bullish on Aegon’s long-term prospects and capital return technique, main them to suggest shopping for the inventory.
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