This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

AIG: Financial Winner, Again

NEW YORK ( TheStreet) -- American International Group (AIG - Get Report) was the winner among U.S. financial name on Thursday, heading into the holiday weekend with shares rising over 1% to close at $32.91.

The broad indexes were mixed, after the U.S. Labor Department reported that initial unemployment claims for the week ended March 30 were a seasonally adjusted 357,000 declining from 363,000 the previous week. Continuing claims for the week ended March 24 fell 16,000 to a seasonally adjusted 3.34 million.

Earlier on Thursday, stocks were weak, after yields on Spanish 10-year bonds rose another 12 basis points to 5.81%, their highest level during 2012.

The KBW Bank Index (I:BKX) pulled back slightly to close at 48.86.

AIG's shares have now returned 42% year-to-date, following a 52% decline during 2011.

The shares trade for 11 times the consensus 2013 earnings estimate of $2.89, among analysts polled by Thomson Reuters. The consensus 2012 EPS estimate is $2.73.

Content on this page requires a newer version of Adobe Flash Player.

Get Adobe Flash player

BernsteinResearch analyst Josh Stirling on Wednesday upgraded AIG to an "Outperform" rating from "Market Perform," while raising is price target to $45 from $29, saying the shares had "50% upside from here," from the belief that the company "will be able to sell its remaining non-core assets in coming months, anchor further offerings 'at cost' by the Treasury, and perhaps even exit the government in time for a 'victory lap' before this fall's election," to "drive book value, earnings, and eliminate the number one reason "not to own" this discounted name."

The government owns about 70% of AIG's shares, and Sterling said that "if the markets cooperate, AIG should be able to sell their remaining $22b of non-core assets and anchor coordinated public offerings to retire nearly 65% of the Treasury's $36b stake," and with AIG soon able to "be a buyer in size," the government's $29 cost basis is more likely a floor, than a ceiling, as is still more commonly believed."

On Thursday, Bank of America Merrill Lynch analyst Jay Cohen reiterated his "Buy" rating for AIG, while leaving his price target unchanged at $40, saying that "despite the repurchase of $3 billion of stock from the Treasury last month and net debt retirement of $6.4 billion, we see an even more substantial return of capital to owners ($29 billion) than our previous estimate."

Cohen said share repurchases "of $10 to $11 billion over the next 12 months is possible," including buying back "a substantial among of stock from the U.S. Treasury, "which would seem to be a compelling investment opportunity with the shares trading at 55%-60% of book value."

Cohen raised his first-quarter operating EPS estimate for AIG to $1.14 from 77 cents, and raised his full-year estimate for 2012 to $3.40 from $3.00, "on positive expected marks" on the company's remaining 45% interest in AIA Group. AIG sold 55% of its AIA stake during March, raising about $6 billion in cash.

Cohen's EPS estimate for 2013 is also $3.40.

Interested in more on American International Group? See TheStreet Ratings' report card for this stock.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AIG $55.82 0.00%
AAPL $93.74 0.00%
FB $117.58 0.00%
GOOG $693.01 0.00%
TSLA $240.76 0.00%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs