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Aviva (LSE: AV.) shares are up more than 60% over the past five years. And analysts still anticipate more to come. In fact, only one out of the 15 that I can find offering recommendations has the stock down as a Sell.
The high end of their price targets range has Aviva reaching 770p. And that would mean a 20% gain for investors buying at the time of writing. Why might it happen soon, if the optimists in the City are right? Well, these price targets tend to be short-term.
And looking at forecasts out to 2028, I can see scope for significantly more growth. Still, before I get too excited, I’ll calm myself with the 15% fall that the most bearish of the brokers sees in Aviva’s crystal ball. Even if it’s very much a minority opinion, it could happen.
Bright outlook
Aviva has pulled off an impressive turnaround under the guidance of CEO Amanda Blanc. And full-year 2025 results released in March showed another step along the company’s transformation path. Fifth consecutive year of “strong, profitable growth,” said the boss.
Cash flow strengthened, Aviva kicked off another new share buyback, and the dividend rose above expectations. Looking forward, I see a forecast dividend yield of 6.2% for the current year — even after Aviva shares have done so well in the past five years.
Forecasters expect earnings per share to more than double by 2028. And that could bring the Aviva price-to-earnings (P/E) ratio down under 10… and with progressive dividend rises too.
All this says one thing to me. That 20% short-term share price target rise could be just the start of something more significant over the longer term.
Be cautious
Before I rush off and buy more Aviva shares, it’s important to take a step back and think around the wider picture. Predictions for earnings and dividend growth need care, as neither is close to being guaranteed. They’re really just the City’s best guess at the current moment. And analysts can be wrong more often than we might care to hope.
I also treat price targets with extra care. In fact, when I make an investing decision I try to ignore them altogether. The fundamentals are what count. And I look for as many takes on a stock’s long-term outlook as I can. Broker forecasts are just a part of that, and so is a company’s own guidance.
But all of this tends to assume there’s no catastrophe just round the corner. And current geopolitics makes it clear it’s not sensible to take that for granted.
What next?
Right now, we’re looking at a forward P/E of around 13 for Aviva shares. And in the current climate, there’s a good case for that being seen as fully valued. In fact, I don’t see a lot of safety margin right now, and we could have a continued weak spell for the share price. But for long-term investors who want a solid cash-generative income payer, Aviva has to be one to consider.
