Aegon's stock saw a significant increase after UBS upgraded its rating from "neutral" to "buy." UBS analysts believe that Aegon has strong potential for capital return, especially through share buybacks.
UBS analysts predict recurring buybacks of around €300 million starting in 2025, which is expected to yield a return of approximately 9%. They also mentioned the possibility of a special buyback program worth €100 million, which could be announced alongside Aegon's third-quarter results.
Aegon's flexibility with excess capital, including its 30% stake in ASR, allows for potential return of capital to shareholders if no compelling acquisition opportunities arise. UBS advises caution regarding the sale of the ASR stake to finance buybacks, suggesting a more measured approach.
De-risking Aegon's non-core U.S. assets could unlock additional shareholder value. UBS slightly adjusted its price target for Aegon, lowering it from €6.65 to €6.55, due to a revision in the valuation of the ASR stake and U.S. non-core assets. However, UBS maintains a positive outlook on Aegon's long-term prospects and capital return strategy.
The market's response to UBS's upgrade reflects growing confidence in Aegon's ability to manage capital and deliver value to shareholders. Investors are eagerly awaiting Aegon's third-quarter results for any indications of new buyback initiatives or changes to its ASR stake.
Aegon's proactive approach to capital management and shareholder value creation is seen as a model for the financial services industry. The emphasis on share buybacks and prudent asset management positions Aegon well in the market. Aegon's upcoming announcements and market developments will be closely watched as the company seeks to enhance its competitive position.