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What’s going on with the Aviva share price ahead of earnings?

By: Invezz

Aviva (LON: AV) share price has been one of the top performers in the FTSE 100 index. It was trading at 448.50p on Monday, a few points below its all-time high of 454.5p. It has risen by over 5% in the past 12 months while the FTSE 100 index has retreated by over 3%.

Aviva earnings preview

Aviva has done well during Amanda Blanc’s tenure as the CEO. Its stock has surged by over 190% from its lowest point during the pandemic, helped by the company’s turnaround and strong dividends.

Aviva’s turnaround has seen it exit its key international markets to become a domestic-focused insurance, wealth, and retirement business. It exited most of its foreign business in a move that generated over £5 billion in cash. It has retained its Irish and Canadian operations.

Aviva will publish its fourth quarter and full-year results on Thursday this week. These results will come a few months after it published encouraging Q3 and nine-month numbers. 

The company’s general insurance brought in £8 billion in Gross Written Premiums (GWP) in the first nine months. That was a 13% increase from a year earlier. Its protection & wealth had £220 million, a 23% increase while its wealth and retirement had £6.4 billion and £4.4 billion, respectively.

Most importantly, the management reiterated that it was on track to hit its medium-term financial targets of hitting operating profit by between 5% and 7% this year.

Aviva has numerous catalysts going forward. Insurance premiums are soaring, The average premium paid for auto insurance jumped to £627, a 12% increase. It has jumped by about 34% compared to Q4’22. Aviva will benefit from this since it is one of the top insurance companies in the UK.

Aviva is also growing its wealth business. Its wealth net inflows jumped by 6% or £6.4 billion. This happened as workplace outflows jumped by 26%, helped by “strong new business and wage inflation.”

This division will likely continue doing well as many UK wealth managers like St. James Place go through a rough patch.

Most importantly, Aviva has one of the safest dividends in the UK. It plans to pay £915 million in dividends in its 2023 financial year or 33.4p. It had paid 31p a year earlier and it now plans to have low to mid-single-digit dividend growth.

Aviva share price forecastAviva share price

AV chart by TradingView

Turning to the weekly chart, we see that the Aviva stock price has been in a strong uptrend in the past few months. It has jumped from the October 2022 low of 154p to 448p. As a result, the stock has remained above all moving averages, a positive sign.

However, Aviva shares have also formed a rising wedge pattern that is shown in red. In most periods, this is one of the most bearish signs in the market. The wedge is nearing its confluence level.

Therefore, while the stock has more upside, a strong pullback cannot be ruled out in the coming months. If this happens, the next point to watch will be at 400p. On the flip side, a move above the upper side of the wedge will open the possibility of the stock soaring to over 500p.

The post What’s going on with the Aviva share price ahead of earnings? appeared first on Invezz

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