Citi assesses the company is now conservatively provisioned after its capital raising. The perception that Insurance Australia is a quality play in the sector is somewhat dented, in the broker’s view.
Estimates for earnings per share are reduced for FY21 by -102% to allow for new business interruption provisioning and the equity raising. Citi downgrades to Neutral from Buy and lowers the target to $5.70 from $6.25.
Target price is $5.70.Current Price is $5.46. Difference: $0.24 – (brackets indicate current price is over target). If IAG meets the Citi target it will return approximately 4% (excluding dividends, fees and charges – negative figures indicate an expected loss).