Aviva shares on a high ahead of full-year results

After a year of recovery, both for the business and the share price, can Aviva provide the foundation for further progress?

When does Aviva report earnings?

Aviva publishes full-year (FY) earnings on 4 March.

Aviva earnings – what does the City expect?

Aviva is expected to report headline earnings per share of 52.1p, down 13% year-on-year (YoY), while revenue is expected to slump 45% to £15.1 billion. The group has beaten on these metrics in five of the last eight results.

The group has been in defensive mode over the past year, which is a prudent move given the uncertainty occasioned by Covid-19. It has cut back on operations overseas to focus on core markets, including the UK, and has also moved to conserve cash. Now, as the economy recovers and life returns to something like normal investors will be looking to Aviva to bolster its payouts and provide a roadmap for the year ahead.

At seven times forward earnings the shares continue to look well-priced, while the 5.4% yield provides an additional attraction.

How to trade Aviva’s results

A total of 22 analysts cover Aviva, with 15 ‘buys’, six ‘holds’ and one ‘sell’. The current target price of 400p represents an 8.7% upside to the 1 March closing price of 367.7p. The average move on results day is 4.9%, compared to the current 14-day average true range (ATR) of 2.2%.

Aviva share price – technical analysis

It has been a good year for Aviva shares, which have steadily recovered from their March lows, and have managed to pull ahead of the FTSE 100 despite suffering a much deeper drawdown during the March sell-off. The uptrend looked under threat in late October, when the price fell sharply, but it found support around 250p, where it had bounced in late July.

Since then it has steady pushed higher, forming a strong trend with higher highs and higher lows, and then succeeded in reaching the 2019 high at 384p before edging back. Momentum remains firmly bullish, as illustrated by daily stochastics remaining above 50 since mid-January. The near-term view remains bullish unless we see a drop below 360p to break trendline support, which might signal a deeper near-term correction is at hand.

Aviva – solid and dependable

Despite rising government bond yields, strong dividend payers like Aviva remain in high demand, and have remained immune from the battles between growth and value stocks, being more of a hardy perennial. Much of the positive view depends on a return to increasing dividend payouts, which should clear the path to further gains in the share price.

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