The Insurance Australia Group Ltd (ASX: IAG) share price has been on form this year.
Since the start of the year, the insurance giant's shares are up 7.2%.
This compares favourably to the ASX 200 index, which is up 1.3% year to date.
Will the IAG share price keep rising in June?
One broker that is calling time on the IAG share price rally is Goldman Sachs.
This morning, the broker has retained its neutral rating and $5.18 price target on the company's shares. This is largely in line with where its shares are currently trading.
As covered here, Goldman sees more value in rival Suncorp Group Ltd (ASX: SUN) at current levels and has put a buy rating and $14.53 price target on its shares.
Why is Goldman lukewarm on IAG?
It is all about valuation for Goldman, with the IAG share price just looking a touch expensive compared to Suncorp.
And while it sees a lot to like with the company, there are a few nagging concerns that prevent it from being a touch more positive. The broker explains:
We are Neutral on IAG on a relative basis. IAG is slightly more expensive than SUN and there is less upside to our TP. We like IAG because 1) Rate cycle is strong across both personal and commercial in Australia. 2) IAG is targeting substantial earnings improvement on its Intermediated Insurance business. 3) Operating leverage on its expense ratio from largely rate driven strong top line growth. 4) IAG has capital flexibility noting possible redundancy in its reserving position with respect to business interruption. 5) Yield curve benefits. However, we are concerned about 1) Volume loss in response to rate increases. 2) Sufficiency of FY23 perils allowance. 3) Continuing non QS reinsurance cost pressures.