Stockbroker Jefferies has upgraded AXA's stock to 'buy' from 'hold' following a reappraisal of the insurer's risk profile and earnings/cashflow outlook.
Jefferies views AXA's target of growing earnings per share by 10% over the next five years as conservative.
"The potential for margin improvement and more effective capital management means that a 20% CAGR [compound annual growth rate] is possible even without a market tailwind," Jefferies analyst James Shuck said in a research note, adding that taking a bullish assumption, AXA could improve return on equity to 19% by 2015.
"Importantly, this does not depend on financial markets and there is good diversification behind the key drivers," Shuck said.
Although AXA's price to earnings discount is high relative to the rest of the market, Jefferies believes AXA now has a tighter control over its destiny.
"The capital position is sound and significantly de-risked," Shuck said. "In particular, the life duration mismatch has been closed and economic capital is now largely insensitive to lower yields."
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