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Analyst Asks: Is AIG's Bull Thesis Stale Or Merely Delayed?

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In a new report, analysts at Deutsche Bank took an in-depth look at American International Group (NYSE: AIG) in an attempt to determine whether the bullish case for owning AIG stock is still intact. After reviewing the company’s current outlook, analysts remain bullish on the stock.

Compelling Valuation

Despite a weak 4Q14 earnings report, analysts like the company’s most recent long-term guidance. With the potential for 43-44 percent book value per share growth, analysts believe that AIG stock is undervalued at current levels.

AIG currently trades at a price to earnings ratio of only 11.1. According to the report, even if the stock sees no multiple expansion over the next several years, the company’s projected book value growth alone would be enough to drive share prices much higher.

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Starr Trial A Catalyst?

Analysts suggest that the Starr International v. U.S. trial could be keeping many potential AIG investors on the sidelines for now. Analysts believe that the $40 billion payout that Starr is seeking is likely scaring the market, but analysts believe fear surrounding the upcoming verdict is overdone.

“We believe there are a number of mitigating factors suggesting the risk is smaller than it appears,” they explain.

Long-Term Leader, Short-Term Lagger

Analysts point out that AIG shares have lagged both the S&P 500 and the Financial Select Sector SPDR ETF (NYSE: XLF) over the past 18 months.

However, more long-term investors that have owned the stock for three years now have seen outsized gains.

Analysts believe that the short-term weakness in the stock is only temporary and that AIG shares are still a source of long-term growth potential for investors. Deutsche Bank has a Buy rating on AIG and a $63 target on the stock.

Latest Ratings for AIG

DateFirmActionFromTo
Oct 2016Credit SuisseInitiates Coverage onNeutral
Sep 2016BarclaysMaintainsOverweight
Aug 2016BMO CapitalMaintainsMarket Perform

View More Analyst Ratings for AIG
View the Latest Analyst Ratings

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