Analysts at JPMorgan upgraded shares of M&G (LON: MNG) but downgraded Aviva (LON: AV.) in a note Monday, also removing the company’s shares from its Analyst Focus List.
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M&G was raised to Overweight from Neutral by the US investment bank, with a price target of 250p, up from 225p.
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The firm highlighted M&G’s attractive growth prospects and the fact it believes the company can offer stronger free cash flow yields than its peers.
While M&G shares haven’t performed well since the company was spun out of insurer Prudential in 2019, JP Morgan feels the company’s recent underperformance is “now more than priced in.”
Furthermore, JPMorgan sees M&G’s free cash flow and earnings expanding strongly in the next few years due to a turnaround in net inflows.
Meanwhile, Aviva was cut to Neutral from Overweight, and its new price target is 550p, down from 575p.
JPMorgan analysts expressed their respect for Aviva’s management team and CEO Amanda Blanc due to their successful business turnaround and balance sheet improvement. However, they mentioned that the stock no longer offers a premium total capital return compared to its UK life insurance peers.
Furthermore, while JPMorgan acknowledges Aviva’s strong performance relative to the sector, they highlight that the company’s current valuation is similar to that of its competitors.
Aviva shares fell 1.65% in Monday’s session, closing at 470p per share. However, the stock is up more than 8% this year. Meanwhile, M&G gained over 2% on Monday but is down over 8% this year.
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