Investing.com -- Assicurazioni Generali's (BIT:GASI) shares rose on Wednesday after Citi Research raised its price target by 5%, reflecting a strong outlook for the Italian insurer.
The target price has been increased to €32.67 from €31.10, signaling confidence in the company’s performance trajectory.
This upward revision was accompanied by the opening of a positive Catalyst Watch by Citi analysts, who expect favorable developments in the near term.
Citi's analysts say that the company’s strong financial performance in 2024, where shares saw a 54% year-to-date increase, surpassing the broader trends in Italian banking stocks.
The outlook remains strong, underpinned by factors such as efficiency improvements, enhanced solvency, strategic capital deployment, and solid growth in both earnings and dividends.
Citi projects a compound annual growth rate for earnings per share at 12% from 2024 to 2027, outpacing the consensus forecast of 8%.
A central catalyst for future growth is anticipated to be unveiled during Assicurazioni Generali's Capital Markets Day on January 30, 2025.
The new three-year plan is expected to address key operational and financial targets, including efficiency gains and expanded cash remittances.
Citi’s projections include €750 million in annual share buybacks from 2025, a move that is absent from the current consensus forecasts.
Generali’s solvency position is another bright spot. Citi forecasts that the company will add 39 percentage points to its solvency ratio by 2027 after dividends and buybacks, far outpacing peers such as Allianz (ETR:ALVG) and AXA.
This flags Generali's strong capital-generation capacity, which positions it to sustain shareholder returns while exploring further operational enhancements.
Moreover, Generali’s debt leverage is considered low compared to industry peers, providing room for additional financial flexibility.
Citi analysts estimate that maintaining stable leverage could add €1.7 billion to free cash flow over the next three years, amplifying the potential for capital deployment.
This optimistic outlook is bolstered by expectations of improved profitability in the property and casualty segment, as well as steady growth in life insurance operations.
Generali’s shift toward unit-linked and protection products, coupled with operational efficiencies, aligns well with market conditions.
The CMD is expected to shed further light on these initiatives, potentially acting as a significant driver for upward revisions in EPS and shareholder value.