Broker snap: There's no reason to own Aviva, says Investec

16th May 2013 09:26

Investec has kept its 'reduce' rating and 316p target price for insurance giant Aviva despite a well-taken first-quarter trading update from the firm on Thursday.The first quarter contained "some good news", the broker said, with operating expenses down 10%, debt being reduced by £300m, the value of new life business up 18% and net asset value increased by 9.0%. However, Investec reckons there's still "plenty of drags" on Aviva's overall performance which will take time to fix, "if indeed these issues can be fixed".Regarding the new business, the UK is showing strength but smaller businesses in Spain and Italy continue to shrink and Poland was flat. Investec said that while the UK resurgence is key as its over half the business by value, there's "much work to do" overseas."There are signs of improvement in the 1Q numbers, but progress in one area is matched by difficulties in another," said analyst Kevin Ryan. "Fixing Aviva is likely to take time and until there is clear, sustainable progress across its various businesses there is no reason to own the stock, in our view," he said.Nevertheless, the statement was received well by the market on Thursday morning with shares up 6.04% at 342.6p by 10:17.BC