The Insurance Australia Group Ltd (ASX: IAG) share price was out of form last week.
At one stage, the insurance giant's shares were down as much as 8% week to date at a 52-week low of $4.42.
The IAG share price recovered a touch late on in the week before ultimately ending the period 3.5% lower at $4.63.
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Is the IAG share price cheap?
One leading broker that believes the IAG share price is trading at a very attractive level is Morgans.
In response to its natural perils claims update last week, the broker retained its add rating but trimmed its price target to $5.36.
Based on the current IAG share price, this implies potential upside of 16% for its shares over the next 12 months.
In addition, the broker is forecasting an 18.2 cents per share dividend in FY 2022. This equates to a 3.9% dividend yield, bringing the total potential return on offer to almost 20%.
What did the broker say?
Morgans notes that IAG had a difficult time in FY 2021 because of stormy weather. And unfortunately, FY 2022 looks set to be the same.
However, its analysts feel the weakness this has caused in the IAG share price has created a buying opportunity for investors. This is due largely to its attractive valuation and positive premium increase outlook.
It commented: "IAG had a difficult FY21 and FY22 is set to be a weather affected year. However, we believe for the patient investor the stock is cheap trading on ~13.5x FY23F earnings, and we expect continuing insurance price increases (further assisted by current bad weather), combined with management's strategy to improve performance to drive improved profitability over time. ADD maintained."
All in all, this could make IAG shares one to consider when the market reopens on Monday.
