How does the IAG share price stack up against analyst ratings?

Let’s check in and see.

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Key points

  • IAG shares have been on analysts' radars for many years now, with the stock consistently underperforming consensus price targets in that time 
  • The stock currently trades below the consensus price target of $5.14 per share, per Bloomberg data, raising questions in terms of valuation and relative value 
  • In the last 12 months, the IAG share price has clipped a 3% loss 

Shares of Insurance Australia Group Ltd (ASX: IAG) have spiked over 10% this year and finished trading at $4.68 apiece on Tuesday.

IAG’s share price chart over the past 6 months resembles a mountainous range with high peaks and low valleys, more than one of a stock price.

Investors have pushed the IAG share price around as if it were a pinball between two planks of wood during that time, with prices ranging as low as $4.24 to as high as $4.92 apiece.

Meanwhile, the S&P/ASX 200 Financials Index (ASX: XFJ) has held onto a 1.24% gain this year to date, despite a recent consolidation.

How does the IAG share price stack up?

According to data provided from Bloomberg, there are a number of analysts providing ratings on IAG shares.

From this list, 58% of analyst urge their clients to buy IAG shares right now, whereas 25% are suggesting to hold.

The remaining 16% – just two analysts – urge their clients to sell or close out their positions if holding IAG shares.

With the IAG share price currently resting at $4.68, it appears as if the consensus has plenty more upside yet to be baked in, assigning a 12 month average price target of $5.14 per share, Bloomberg says.

A bit more on IAG’s analyst ratings

This price target has actually crept down over the last two years, despite the number of buy calls increasing in the same time.

It has wiggled down from around $6.40 per share in May 2020, the consensus price target on IAG shares. However, it has hovered above the market price consistently in that time.

In terms of those that are above consensus estimates, each of Credit Suisse, JP Morgan, Jarden, Barrenjoey Markets and Citi reckon IAG could spike above the $5.14 mark.

Meanwhile, Macquarie, Barclay Pearce and Morgan Stanley value IAG below consensus, with analysts at Morgan Stanley slapping a sell rating on the stock in doing so.

Net-net, if going by consensus data, then it might appear that IAG is undervalued trading around 10% below the average price target from analysts covering the stock.

However, with any number of determinants of fair value not discussed in this report, that is ultimately for the market to decide.

In the last 12 months, the IAG share price has clipped a 3% loss despite its outsized return this year to date.

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Insurance Australia Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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