Aviva (LON: AV) Stock Gains With Goldman Sachs “Buy” Rating

Shares in Aviva plc (LON: AV) are attracting renewed attention following the reinstatement of a “Buy” rating by Goldman Sachs, a move that highlights the insurer’s compelling valuation relative to its European peers. The endorsement underscores Aviva's robust capital return yield and its potential for further growth within the multi-line insurance sector.

Goldman Sachs analyst Andrew Baker has set a price target of 736 GBp, indicating confidence in Aviva's underlying strength and strategic direction. This positive outlook is rooted in the belief that the market has yet to fully recognize Aviva’s earnings potential and the benefits of its diversified business mix. The firm projects a total return yield of approximately 11% by 2026, fueled by anticipated dividends per share growth of 7.5% annually from 2024 to 2026.

Aviva's financial performance has been robust, as evidenced by a 22% increase in half-year operating profit, reaching £1.07 billion. This significant growth, reported in August 2025, was primarily driven by strong performance in UK and Ireland general insurance premiums, coupled with higher net flows into the company's wealth division. Consequently, Aviva raised its interim dividend by 10% to 13.1 pence per share, rewarding shareholders and reflecting the company's financial strength.

The market responded positively to these results, with Aviva's stock price rising 4% to reach a 17-year high. This surge marked a 46% gain year-to-date, significantly outperforming the FTSE 100's 12% rise over the same period. This upward trajectory reflects growing investor confidence in Aviva's ability to deliver consistent growth and returns.

Adding to its strategic positioning, Aviva completed the £3.7 billion acquisition of Direct Line in July 2025, a move approved by the UK's Competition and Markets Authority. This acquisition has solidified Aviva's position as the UK's largest home and motor insurer, boasting a market share exceeding 20% in these key sectors. The integration of Direct Line is expected to generate synergies and contribute to enhanced market presence and future growth prospects.

Analysts anticipate that Aviva will continue to benefit from margin gains resulting from the Direct Line acquisition. While some expect a potential softening in general insurance rates, Aviva projects sustained growth in its health and wealth segments, showcasing the resilience of its diversified business model. The company's strategic initiatives, including its focus on profitable growth and efficient capital management, have contributed to a bullish sentiment among investors and analysts. Aviva appears undervalued when compared to its peers.

Price Targets

Analyst Summary: Bull and Bear Cases

Goldman Sachs' renewed “Buy” rating and price target of 736 GBp serve as a catalyst for increased investor interest in Aviva, driven by the company's strong financial performance, strategic acquisitions, and favorable market positioning. These factors have collectively created a positive outlook for Aviva's future, potentially leading to further share price appreciation as markets recognise its intrinsic value. The recent analyst affirmation underscores the potential for continued upward momentum.