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Credit Suisse Believes 'Carl Icahn Benefit' Already Priced Into AIG

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Credit Suisse Believes 'Carl Icahn Benefit' Already Priced Into AIG
  • Shares of American International Group Inc (NYSE: AIG) have appreciated 14.48 percent year-to-date, trading close to their 52-week high on December 1.
  • Thomas Gallagher of Credit Suisse has maintained a Neutral rating on the company, with a price target of $65.
  • Gallaghar believes that the benefit to American International form Carl Icahn investing in the company are mostly priced into the stock.

Analyst Thomas Gallaghar explained that following Icahn’s consent solicitation “and AIG's swift response that it would have a strategic update ahead of 4Q 15 results, we think most investors view this situation as a 'win-win' for the AIG stock.”

Gallaghar believes the company’s “elevated sense of urgency” is a positive and includes the possibility that American International is considering the divesture of some of its modular businesses, while increasing expense control and continuing with aggressive capital management.

However, Gallaghar believes that all these positive are also already largely factored into the stock, which could have been trading 5-10 percent lower in the absence of the boost from the presence of Icahn.

“We believe that many investors anticipate that these factors should result in more meaningful upside for the shares, extrapolating recent high M&A multiples paid by Japanese buyers for certain US insurers,” Gallaghar added.

Although the company’s segment reporting does not offer transparency regarding either earnings or the capital involved in the various businesses, Credit Suisse’ review of the U.S. and Japanese regulatory filings suggest that although still in the positive, the overall EPS accretion would be 5 percent or less.

Latest Ratings for AIG

DateFirmActionFromTo
Jun 2019DowngradesBuyHold
May 2019MaintainsOverweight
May 2019MaintainsOverweight

View More Analyst Ratings for AIG
View the Latest Analyst Ratings

Posted-In: Carl Icahn Credit Suisse Thomas GallagherAnalyst Color Reiteration Analyst Ratings Best of Benzinga

 

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