Analysts at stockbroker Gerrard are warning Aviva shareholders to wait for signs that the company's ...
Analysts at stockbroker Gerrard are warning Aviva shareholders to wait for signs that the company's decision to cut dividends to buy into growth businesses is working before committing to buying a greater stake in the firm.
Cutting the dividend this year freed up £330m in cash to support new business, but the cut was at odds with the company's position as a life assurer, traditionally committed to sharing returns with shareholders.
The focus on pensions and stakeholder could bring rewards in the longer term, but if the strategy fails it could lead to significant destruction of shareholder value, the broker says.
Gerrard has upgraded its recommendation on the stock to a 'hold' from a 'sell', but says this is mainly due to the share price fall since the spring and management's recent assurances that solvency is not a problem.
The market capitalisation value of Aviva has fallen more than 60% in the past year.
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