Jefferies downgrades Allianz to ‘hold’ amid valuation concerns

Investing.com — Jefferies has revised its rating for Allianz (ETR:) SE to “hold” from “buy,” citing the company’s growth targets and the stock’s strong performance. 

The analysts said that Allianz’s recent plan, which aims for an annual earnings per share growth of 7% to 9%, represents an acceleration compared to previous goals. 

This target aligns with market expectations and has already been factored into the stock’s valuation, which is now trading at a premium to historical levels.

Allianz’s share price has risen by 23% over the past year, largely due to strong results in the first half of 2024. 

The stock is currently trading at a price-to-earnings ratio of over 11 times its 2025 forecasted earnings, significantly higher than its 20-year average of 8.8 times. 

Jefferies raised its price target slightly from €310 to €325 to reflect higher earnings projections but noted limited upside from the current levels.

The analysts also flagged a shift in Allianz’s capital return policy. The insurer plans to allocate at least 15% of its net income to share buybacks over 2025-2027, aligning with policies seen at competitors like AXA. This adjustment, while positive, has not significantly altered Jefferies’ view of the stock.

Despite Allianz’s strong growth prospects, Jefferies flagged concerns about valuation, noting that the stock’s recent re-rating limits further potential gains. 

While the company’s diversified portfolio and operational strengths remain compelling, the current share price already reflects these advantages.