Insurance Australia Group shares (ASX: IAG) are seeing an upward trend, coming off a strong 2024 with gains of more than 50% in value. The stock has started off the year in a range, currently trading at $8.45, and in range of a breakout. Taking a look at the 1 month and we can see multiple rejections at $8.60, but with higher lows. This could signify bullishness, with buyers willing to step in at higher levels, but a breakdown cannot be discounted.
Part of the rise in price today comes as Macquarie issues a favourable outlook for IAG, anticipating a robust first-half result for Fiscal Year 2025 (FY25).
Macquarie, a leading financial advisory group, has issued a forecast suggesting a “strong” performance for IAG’s FY25 first-half results. This optimistic outlook stems from a combination of IAG’s solid financial growth and favorable weather conditions that are expected to boost its results.
In FY24, IAG reported a 7.9% increase in net profit after tax, totaling $898 million. Additionally, the company’s insurance margin increased by 6% to 15.6%, and its gross written premiums (GWP) rose by 11% to reach $16.4 billion.
IAG announced the acquisition of 90% of RACQ’s insurance underwriting business for $855 million. This strategic move is expected to enhance IAG’s GWP by an additional $1.3 billion.
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Macquarie highlights that IAG shares are trading at a 3% price-to-earnings (P/E) ratio premium compared to international peers. Meanwhile, Goldman Sachs maintains a neutral rating on IAG, setting a 12-month price target at $8.05. Ord Minnett offers a more optimistic view with an accumulate rating and a price target of $9.30. UBS forecasts an accelerated growth for IAG, predicting a 45% increase in net profit after tax to $1.13 billion in FY25 and a rise in dividends to 29 cents per share from 27 cents.
Whether IAG continues the bullish trend of last year and breaks out into new territory is yet to be seen, but operational improvements should they persist could be well received. As the FY25 half-year results approach, markets are keeping a close watch.
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