RBC Capital has opened coverage on AXA SA (EPA:CS) (OTC:AXAHY) with an Outperform recommendation and a price target of EUR 48.00, attributing the call to what it describes as a successful, systematic reshaping of the company’s business mix.
The research team emphasized that AXA’s strategic pivot toward more technical insurance lines and fee-based revenue streams has delivered higher profitability and dampened earnings swings. Those operational changes, the note says, have helped drive the stock to an 18.38% total return over the last year.
RBC highlighted a notable valuation disconnect: AXA currently trades at a 26% price-to-earnings discount to a composite of European peers, a gap the firm considers wider than AXA’s five-year average discount of 20%. Trading at a P/E ratio of 11.61, AXA appears undervalued against its Fair Value, according to InvestingPro’s analysis cited in the note, which the research firm views as a potential catalyst for upside.
The firm pointed investors to AXA’s multi-year program of portfolio and business model changes that started in 2016. That strategy has focused on scaling core segments including Property & Casualty (P&C), Protection, Capital Light Guaranteed & Savings, and Health. RBC noted the importance of M&A and portfolio actions in that program, referencing the 2018 acquisition of XL Catlin and the 2019 exit from Equitable Holdings (EQH) as part of the strategic path.
On financial targets, RBC says AXA is tracking toward the higher end of its medium-term objectives. The insurer is said to be close to the top of its 6-8% EPS compound annual growth rate (CAGR) and its 14-16% return on equity (ROE) targets for fiscal years 2024-2026. The firm also underscored AXA’s Solvency II ratio at roughly 220%, which RBC characterizes as providing robust capital protection for shareholders.
RBC flagged shareholder-friendly aspects of AXA’s profile as well: a 4.51% dividend yield and a 46-year record of consistent dividend payments. For investors wanting additional context on AXA’s balance sheet and earnings quality, InvestingPro assigns the company a financial-health rating of "GOOD" and offers a more detailed Research Report and ProTips as part of its platform coverage for more than 1,400 leading stocks.
Market consensus and analyst range
RBC’s initiation aligns with a broader analyst view captured on InvestingPro, where consensus sentiment sits at a strong buy. Analyst target prices compiled by InvestingPro range from $44.00 to $53.73, indicating a band of expectations above the current market price and broadly consistent with RBC’s EUR 48.00 target when accounting for currency and methodology differences noted by the research services.
Takeaway
RBC’s initiation frames AXA as a company whose operational and portfolio changes have materially shifted earnings quality and risk profile, with the research house pointing to valuation as a potential source of investor upside.