Could this be a looming risk for IAG shares?

Analysts appear to have a mixed view on IAG shares.

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points
  • IAG shares have lifted this week 
  • Analysts at Macquarie are concerned about market churn in the insurance sector 
  • However, one fundie has recently described IAG as a high-quality share 

The Insurance Australia Group Ltd (ASX: IAG) share price has lifted this week, but what is the future outlook?

IAG shares have jumped almost 4% since market close on Friday — including a 1.1% gain on Thursday — and are currently worth $4.58 a piece.

So what could be ahead for IAG shares?

Blindfolded woman about to walk off stairs on a cliff

Image source: Getty Images

What's ahead for IAG?

IAG is an insurance giant operating in Australia, New Zealand and Asia.

Macquarie analysts are concerned market churn may place pressure on IAG shares and the Suncorp Group Ltd (ASX: SUN) share price.

The analysts raised concerns churn will rise across the insurance sector amid a potential affordability crunch, The Australian reported.

But analysts reportedly believe Suncorp may outperform IAG due to better underlying insurance trading ratio margin.

However, Wilson Asset Management (WAM)'s Anna Milne is more positive on the IAG share price. As my Foolish colleague Mitch reported recently, she believes it is one of multiple ASX shares that are among "the highest-quality names in their respective sector".

Milne also sees the company's national expansion as a positive for IAG.

Commenting on the outlook for IAG, she said:

IAG is the owner of the brand NRMA, which is one of Australia's most trusted brands. The psychology of investing in these [IAG and others] quality names is that when share prices decline, it's seen as an opportunity to get these high-quality names on sale.

IAG reported a $347 million profit in the 2022 financial year, compared to a $427 million loss in FY21.

The company paid a partially franked final dividend of 5 cents per share in September, taking total dividends for the financial year to 11 cents.

Share price snapshot

IAG shares have shed nearly 7% in the past year, while they have risen nearly 8% year to date.

For perspective, the ASX 200 has lost nearly 9% in the past year.

IAG has a market capitalisation of more than $11 billion based on the current share price.

Motley Fool contributor Monica O'Shea 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 Australia has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Financial Shares

A man with long hair and tattoos holds out an EFTPOS payment machine from behind a shop counter.
Financial Shares

This ASX payments stock jumped after a key RBA decision

RBA card reforms send Tyro shares 4% higher on Tuesday.

Read more »

Hand of a woman carrying a bag of money, representing the concept of saving money or earning dividends.
Financial Shares

This beaten-down ASX financial stock could deliver returns of better than 80%

Canaccord Genuity says there's plenty of upside for this stock.

Read more »

two people sitting at a desk look on in dismay as a colleague holds a chart with diminishing green bars topped with a jagged red line representing a stock market crash.
Financial Shares

Down 55%! Can this ASX financial stock stage a major comeback?

Some brokers see upside well above 180%!

Read more »

A young couple sits at their kitchen table looking at documents with a laptop open in front of them.
Financial Shares

AMP jumps on $150 million buyback and CEO handover. Is this beaten-down ASX stock turning a corner?

Investors are cheering AMP’s buyback plan as Blair Vernon officially takes charge.

Read more »

A woman smiles at the outlook she sees through binoculars.
Financial Shares

How much could the Macquarie share price rise in the next year?

This financial giant could deliver big returns.

Read more »

A woman presenting company news to investors looks back at the camera and smiles.
Financial Shares

AMP shares charge higher on Monday despite market selloff: What's going on?

What has this financial services company announced? Let's find out.

Read more »

CEO of a company talking.
Financial Shares

Suncorp shares slip as CEO steps aside

Suncorp shares slip after its CEO takes short-term medical leave.

Read more »

A young man working from home sits at his home office desk holding a cup of tea and looking out the window.
Financial Shares

Why is the Magellan share price down 6% today?

The investment manager issued an update regarding the proposed Barrenjoey merger today.

Read more »