IAG - Morgan Stanley rates the stock as Underweight
PUBLISHED
2021-12-07
Content
Morgan Stanley downgrades IAG to non-consensus Underweight and cuts the target price to $3.75 from $4.80, listing 10 contributing factors that should increase the company's capital costs and hurt the company's ESG prospects.
The broker cites IAG's skew to CAT-prone short-tail lines, NZ reform risks, higher catastrophe-cost volatility; higher reinsurance pricing and tighter access; quota share reinsurance renewal risks; regulatory risk on personal reinsurance pricing; capital regulatory risk; consumer data right concerns; CDR regulation; reserving risk; and a remuneration report strike.
But wait, there's more.
Morgan Stanley casts a nervous eye to margin headwinds and market share losses; and expects an extended $1.8bn capital buffer may be required to offset reduced capital flexibility - although the release of business interruption combined with the liberation of tax assets could be another option.
Sector: Insurance.
Target price is $3.75.Current Price is $4.30. Difference: ($0.55) - (brackets indicate current price is over target). If IAG meets the Morgan Stanley target it will return approximately -15% (excluding dividends, fees and charges - negative figures indicate an expected loss).