Aviva Shares Tumble Despite Strong Results as Valuation Less Compelling

Aviva (LON: AV.) shares edged lower after the insurer reported strong full-year results and set out ambitious new growth targets, with analysts at Hargreaves Lansdown noting the valuation is no longer as attractive as it once was.

The stock fell about 2.7% on Friday even as Aviva delivered an operating profit of £2.2 billion for 2025, up 25% year-on-year and in line with recently upgraded guidance.

Hargreaves Lansdown said a “good end to the year” helped the insurer meet its targets early, prompting management to unveil new medium-term goals. These include 11% annualised growth in operating earnings per share between 2025 and 2028.

“We like the confidence and the focus on capital-light growth from insurance and wealth,” the analysts said, adding that if achieved, the target would represent “a step up from current expectations.”

Growth was supported by strong momentum in general insurance, where premiums rose 18% to £14.1 billion. The inclusion of Direct Line Group helped drive 27% growth in the UK and Ireland division.

Aviva also increased its full-year dividend by 10% to 39.3p and announced a new £350 million share buyback programme. According to Hargreaves Lansdown, the group’s balance sheet remains strong even after the Direct Line acquisition reduced its Solvency II cover ratio to 180%.

The analysts described Aviva as “a top-class outfit, with fingers in basically all the right pies,” highlighting its exposure to insurance, wealth and retirement markets.

However, they cautioned that while “momentum looks good” and the 6.3% dividend yield is attractive, “the valuation isn’t as attractive as it has been,” particularly with softer market signals emerging for 2026.