Aviva Shares Dip as Morgan Stanley Downgrade Weighs

Aviva shares experienced a decline this morning following a downgrade from Morgan Stanley, reflecting a more cautious outlook on the European insurance sector. The downgrade has seemingly impacted market sentiment, contributing to the observed price decrease.

This morning, Aviva's shares (LON: AV) were trading 1.3% lower at 681.60p. The downward pressure came after Morgan Stanley analyst Hadley Cohen adjusted Aviva's rating from ‘Overweight' to ‘Equal Weight'. The firm also lowered its price target for Aviva shares to 670 GBp, down from the previous target of 690 GBp. This adjustment was made as part of Morgan Stanley's broader 2026 outlook for European insurance companies, indicating a potentially less optimistic view of the sector's near-term performance.

In contrast to Morgan Stanley's recent downgrade, JP Morgan reiterated an ‘Overweight' recommendation for Aviva on November 26, 2025. JP Morgan assessment included a one-year price target of $8.99 per share. This target suggested a potential upside of approximately 49.14% from Aviva's then-current price of $6.03, highlighting confidence in the company's future growth prospects and overall financial health.

Aviva's Q3 2025 trading update, released on November 13, 2025, presented a mixed picture. The company reported a 12% increase in general insurance premiums, reaching £10 billion. This growth was primarily driven by a 24% surge in Personal Lines, supported by the acquisition of Direct Line and strategic partnerships, such as the collaboration with Nationwide Building Society. However, the Retirement division experienced a 27% decline in sales, mainly attributed to increased competition within the bulk purchase annuity market. Despite these varied results, Aviva announced its intention to resume share buybacks, signaling confidence in its financial strength and a commitment to delivering shareholder returns.

The diverging opinions from different analyst firms underscore the complexities surrounding Aviva's valuation. While JP Morgan maintains a positive stance with its ‘Overweight' rating, Morgan Stanley's recent downgrade introduces a note of caution.