Is it possible that the Insurance Australia Group Ltd (ASX: IAG) share price could reach $6 by the end of 2021?
Insurance Australia Group (IAG) is one of Australia's largest insurance businesses with a number of brands including NRMA Insurance, CGU, SGIO, SGIC, Swann Insurance, WFI and Poncho Insurance. In New Zealand it also has NZI, State, AMI and Lumley.
Some of Australia's leading brokers have had their say on what their price targets are for the IAG share price.
A price target is where the broker thinks that the IAG share price will be in 12 months from now. So, it's not necessarily where the broker thinks the business will be by the end of the calendar year, though it may give an indication which way the share is headed, if the broker is right.
What are the broker expectations?
Different brokers have different ideas about how the IAG share price is going to perform.
For example, Morgan Stanley has a price target on the business of $4.80. That suggests that IAG shares could drop by around 10% over the next 12 months, if the broker is right.
However, Morgan Stanley did note the win in court for insurers relating to business interruption from the pandemic. The broker doesn't rate IAG as a buy at the moment. Instead, it thinks it is a hold.
Based on the current IAG share price, Morgan Stanley puts it at 21x FY22's estimated earnings.
However, another broker is much more positive than Morgan Stanley.
Analysts at Macquarie Group Ltd (ASX: MQG) rate the insurance giant as a buy. The price target here is $5.70. If Macquarie is right, the shareholders could gain around 6% over the next 12 months.
Macquarie analysts believe that IAG shares are at good value and think it's actually valued at 21x FY22's estimated earnings.
What's happening for the IAG share price recently?
Yesterday, IAG shares rose by 3% after the insurer noted the court win relating to business interruption.
In that announcement, it said that the Federal Court found in favour of insurers on a significant number of policy wording questions and for policyholders on other questions.
IAG said that the judgement is detailed, and a comprehensive analysis is required to assess the impact, noting it will vary by insurer.
The Federal Court has set aside time in November to hear any appeal. This is to enable any appeal of the judgement to be finalised before the end of the year, or early in the new year.
IAG is reviewing the judgement to determine whether to appeal any aspect of the judgement. It will also consider the provision it announced in November 2020 and any required update will be provided at the appropriate time.
The company wants to resolve this as quickly as it can for customers.
