The Aviva (LSE: AV.) share price has been slowly trending upwards in the last five years. During that time, it’s climbed 18.2%.
And it’s continued this fine form into 2024. Year to date, the stock’s risen 11.8%, outperforming the FTSE 100, which is up 8.2%.
But as investors, we shouldn’t focus too heavily on what’s been and gone. Granted, it can sometimes help us make better decisions. However, I’m more worried about how a stock will perform in the times ahead. That’s more important.
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With that in mind, where could Aviva end this year?
My prediction
As highlighted above, the Aviva share price has been steadily gaining momentum in recent months and I think it’ll continue to head upwards in 2024.
If its share price were to break the £5 barrier, which it flirted with at the tail end of March, that would signify a 3.1% rise from its current price (£4.85).
But to be honest, I think it could climb further. The UK stock market’s been performing strongly this year, I reckon we could see Aviva break through £5. A 5% rise from its current price would leave its share price at £5.09. I think somewhere closer to that could be more viable. But of course, a lot could happen that means it doesn’t get there!
Valuation
So I’m bullish on Aviva shares. But what could push their price higher? Well, its valuation is one factor.
The stock currently trades on a trailing price-to-earnings ratio of 12.9. That’s a small notch above the Footsie average of 11. However, it does look cheaper than its competitors Prudential (15.7) and Admiral Group (24.8). Bearing that in mind, it looks like there’s still value in Aviva.
Streamlining mission
As Aviva continues on its streamlining mission, this could also help drive the stock higher. The business has been looking to slim down its operations for years. However, under CEO Amanda Blanc, it’s sped up this process.
Under her tenure, the business has disposed of over a dozen underperforming businesses. Looking ahead, there’s talk of it offloading more in the months to come.
That’s part of its wider plan to trim some fat and cut costs. So far, it seems to be paying off. Last year, the company delivered its £750m cost reduction target a year ahead of schedule.
The risks
While that’s all well and good, there are risks with streamlining. Essentially, it leaves Aviva reliant on just a few markets. Should they underperform, this could have negative implications for its share price.
What’s more, I’m always wary of unexpected events such as natural disasters when investing in insurance companies. These events can massively impact their finances, so it’s always something I bear in mind.
I’d still buy
But even with those risks considered, at its current price I’d still buy Aviva shares today if I had the cash. Not only do I think the stock looks good value and I like the moves the firm’s making, I’m also a fan of its 6.9% dividend yield.
That’s way above the Footsie average. And last year, its dividend increased 8%. That means I could pick up some passive income while I wait for its share price to keep climbing.
