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Even in 'Bear Case Scenario' AIG (AIG) Undervalued - Deutsche Bank

February 26, 2013 11:03 AM EST Send to a Friend
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Price: $55.24 -1.94%

Rating Summary:
    15 Buy, 10 Hold, 0 Sell

Rating Trend: Down Down

Today's Overall Ratings:
    Up: 13 | Down: 24 | New: 21
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Analysts at Deutsche Bank see value in shares of American International Group (NYSE: AIG). In fact, even in a "bear case" scenario analysts think the stock is worth $40, though they value it at $47 per share.

"If we assume a catastrophe-normalized 103% combined ratio, 1.5% reserve fortification and an inability to reduce sharecount below 1.5B all in perpetuity, we arrive at GAAP EPS from insurance operations of $2.60. Assuming a 10x multiple on these trough earnings, $8 for the value of the DTA, $2 for the DIB, $1 for GCM and $3 for the proceeds of ILFC, we come to a floor valuation of $40, above the current stock price," said analyst Joshua Shanker.

Shanker thinks the expense ratio at AIG will improve in 2014 and 2015, helping fuel upside in the stock.

Deutsche Bank reiterated a Buy rating on AIG and raised its price target from $41 to $47.

For an analyst ratings summary and ratings history on American International Group (NYSE: AIG) click here. For more ratings news on American International Group click here.

Shares of American International Group closed at $37.06 yesterday.




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