My Aviva share price prediction for the second half of 2024

Jon Smith outlines some key influencing factors for the Aviva share price in coming months and explains how he thinks it will react.

| More on:

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Over the past year, the Aviva (LSE:AV) share price has comfortably outperformed the FTSE 100. The stock’s risen 25% over this period, which includes almost a 10% gain so far in 2024. Yet as we start the second half of the year, there are several points I think investors need to note that could either spur the rally, or cause a fall. Here’s my prediction.

Potential for reforms

Part of what Aviva does is related to the insurance market and being investment managers. This is interesting because part of what the Labour Party’s looking to do as the new government is to introduce some pension reforms. I don’t know exactly what this will entail, but it could have a positive impact on the company.

For example, there were concerns that Labour would scrap the lifetime allowance, but this has been put to bed. This is a good thing, as any cap could have seen high earners stop contributing to pensions above a certain threshold.

There’s chatter that the current system of rebates into pension pots depending on income tax levels could be simplified to just one flat rate. I think this would be good for Aviva. Any simplification of regulations should make it more convenient for people and businesses to invest. As a result, this could help to increase revenue and thus aid the share price.

The risk, to my view, is that policies might get blocked through parliament, or any real change could take place beyond this year.

The impact of results

In the middle of August we get the half-year results. This will be another key driver for the stock price in coming months. In May, we had the first quarter results, which showed that the business is still performing well.

General insurance premiums were up 16% to £2.7bn versus the same period last year. The wealth management division did well, with net flows of £2.7bn (up 15% from last year). If money from clients is flowing into the business, it can then be used to earn commissions and fees from being invested.

Should we get further confirmation in August that this is being maintained, I think the share price could rally. It will also coincide with the dividend announcement. Given that the current yield is 7.03%, income investors will be watching this closely.

Even though results have the potential to boost the stock, the release could be a negative. The business could have struggled with cash flow issues, investor outflows, or other problems that will come to light.

Positive from here

When I put everything together, I think that Aviva shares can continue to move higher in the next six months. I believe the 10% gain in the first half can be matched in the second half, based on green shoots around simplifying pensions and good half-year results. This would take the share price up to 530p.

Given my view, I’m thinking about adding it to my portfolio.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Jon Smith has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing For Beginners

Investing Articles

What would I do if Rolls-Royce shares plunged 50%? History suggests a big decline is coming

While Rolls-Royce shares have delivered massive outperformance in recent years, they also have a history of significant declines.

Read more »

British union jack flag and Parliament house at city of Westminster in the background
Investing Articles

2 of the widest moats in the FTSE 100

A durable competitive advantage is key to a good investment. And Stephen Wright thinks a couple of FTSE 100 firms…

Read more »

Investing Articles

Will the 5.6% BT Group dividend yield grow in 2024?

Zaven Boyrazian explores whether BT Group can continue hiking its dividend and if the telecoms giant belongs in his income…

Read more »

Investing Articles

FTSE 100’s near a 52-week high, but this stock’s still dirt cheap!

The FTSE 100's on the rise, but not all stocks have been so fortunate. Here’s one company that got left…

Read more »

Investing Articles

£3,000 of savings? Here’s how I’d use that to start buying shares this July

Our writer uses his investment experience to consider what he would do today if he wanted to start buying shares…

Read more »

Investing Articles

Would I be crazy to buy Lloyds shares at a 52-week high?

Lloyds shares are up 30% over the last 12 months. But at a P/E ratio of 8, is it too…

Read more »

Businessman use electronic pen writing rising colorful graph from 2023 to 2024 year of business planning and stock investment growth concept.
Investing Articles

History suggests the FTSE 100 may double from where it is now

The FTSE 100 overall is buoyant, but this single stock has the potential to be a better buy now its…

Read more »

Fans of Warren Buffett taking his photo
Investing For Beginners

How to invest £2k the Warren Buffett way

Warren Buffett's made a fortune by investing his money in a very specific way. Here’s how to invest a few…

Read more »