NEW YORK (TheStreet) -- Shares of American International Group (AIG) are falling 0.32% to $62.37 in Tuesday's early morning trading session after analysts at Deutsche Bank downgraded the company to "hold" from "buy" with a price target of $64.
"Significant outperformance in 1H15 has brought the stock to be largely where we think it will trade this time of year," analysts said.
While analysts believe that there will be a multi-year upside in the stock, near-term opportunity has declined materially due to AIG's rally, they added.
Additional risks include exposure to significant losses associated with major catastrophes, like the 1Q11 Tohoku earthquake and smaller events like the 2Q11 tornadoes.
American International Group provides insurance products and services for commercial, institutional, and individual customers in the U.S., the Asia Pacific, and internationally.
Separately, a U.S. judge on Monday awarded no damages to the company's investors led by former CEO Maurice "Hank" Greenberg in their lawsuit against the U.S. government, despite finding that the U.S. Federal Reserve "exceeded its authority in the insurer's 2008 bailout," Reuters reported.
TheStreet Ratings team rates AMERICAN INTERNATIONAL GROUP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate AMERICAN INTERNATIONAL GROUP (AIG) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its solid stock price performance, increase in net income and largely solid financial position with reasonable debt levels by most measures. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Insurance industry. The net income increased by 53.4% when compared to the same quarter one year prior, rising from $1,609.00 million to $2,468.00 million.
- Although AIG's debt-to-equity ratio of 0.30 is very low, it is currently higher than that of the industry average.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 9.4%. Since the same quarter one year prior, revenues slightly dropped by 2.5%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- AMERICAN INTERNATIONAL GROUP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, AMERICAN INTERNATIONAL GROUP reported lower earnings of $5.21 versus $6.07 in the prior year. For the next year, the market is expecting a contraction of 5.5% in earnings ($4.93 versus $5.21).
- You can view the full analysis from the report here: AIG Ratings Report