The Insurance Australia Group Ltd (ASX: IAG) share price has been a strong performer over the last 12 months.
Since this time in 2022, as you can see below, the insurance giant's shares have risen over 18%.
Can the IAG share price keep climbing?
Unfortunately, one leading broker believes the IAG share price could be close to reaching its peak.
According to a note out of Goldman Sachs, its analysts have initiated coverage on the insurer with a neutral rating and $5.29 price target.
Based on its current share price of $5.06, this suggests potential upside of just 4.5%.
And while Goldman is expecting an attractive partially franked 4.7% dividend yield in FY 2023, stretching the total potential return beyond 9%, it isn't enough for a more positive recommendation. Particularly when other insurance shares offer greater potential returns.
What did the broker say?
Goldman has outlined a number of reasons why its analysts prefer Suncorp Group Ltd (ASX: SUN) over IAG at present. It said:
We note that IAG and SUN are currently facing similar trends from an earnings perspective however we have a slight preference for SUN on valuation. SUN also has higher upside to our PT. We also note that SUN has possible catalysts on the horizon with the proposed sale of the bank/capital management as well as a possible reinsurance QS arrangement which could be supportive to margins. IAG's QS renewal on materially consistent financial outcomes bodes favourably for SUN in this regard.
The broker has initiated coverage on Suncorp with a buy rating and $13.88 price target.
Though, it is worth noting that Goldman's top pick in the insurance sector is QBE Insurance Group Ltd (ASX: QBE). There are seven reasons why this is the case, and you can read about them here.
