Broker snap: UBS cuts target price for Aviva but stays upbeat

27th Mar 2013 10:27

UBS has reduced its target price for insurance group Aviva from 450p to 440p following this month's 2012 results but has maintained its 'buy' recommendation for the stock.Shares in Aviva have tanked 15% over the past month after a surprise cut in the dividend for 2012, as it took a £3.3bn write-down on a disposal in the US."We believe the dividend cut was driven by a more conservative regulatory approach to internal debt, even though the economic capital target was more than satisfied by recent disposals."UBS estimates that debt reduction targets can be funded from organic capital generation alone and an acceleration of repayments in the second half "would both reduce financial risk and quash any residual concerns over equity issuance"."Alternatively the dividend could recover more quickly than we forecast."While the broker has cut its dividend expectations by 35-44% over 2013-2016 but has more or less kept its other forecasts unchanged."The 2012 results appear conservatively stated, and offer a solid base for future growth if the new CEO can execute an operational turnaround to match the balance sheet repairs."Shares were down 2.11% at 297.3p by 10:41.BC