Morgan Stanley was to blame for half the losses today - from...

Morgan Stanley was to blame for half the losses today - from FNArena

Morgan Stanleyrates IAG asDowngrade to Underweight from Equal-weight(5) -

Morgan Stanley downgrades IAG to non-consensus Underweight and cuts the target price to $3.75 from $4.80, listing 10 contributing factors that should increase the company's capital costs and hurt the company's ESG prospects.

The broker cites IAG's skew to CAT-prone short-tail lines, NZ reform risks, higher catastrophe-cost volatility; higher reinsurance pricing and tighter access; quota share reinsurance renewal risks; regulatory risk on personal reinsurance pricing; capital regulatory risk; consumer data right concerns; CDR regulation; reserving risk; and a remuneration report strike.

But wait, there's more.

Morgan Stanley casts a nervous eye to margin headwinds and market share losses; and expects an extended $1.8bn capital buffer may be required to offset reduced capital flexibility - although the release of business interruption combined with the liberation of tax assets could be another option.

Target price is$3.75Current Price is$4.47Difference:minus $0.72(current price is over target).
IfIAGmeets the Morgan Stanley target it will return approximatelyminus 16%(excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is$5.20, suggesting upside of20.1%(ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Morgan Stanley forecasts a full yearFY22dividend of3.00cents and EPS of17.00cents. At the last closing share price the estimated dividend yield is0.67%. At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is26.29. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is20.6, implying annual growth ofN/A. Current consensus DPS estimate is15.0, implying a prospective dividend yield of3.5%. Current consensus EPS estimate suggests the PER is21.0.

Forecast for FY23:

Morgan Stanley forecasts a full yearFY23dividend of12.00cents and EPS of26.00cents. At the last closing share price the estimated dividend yield is2.68%. At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is17.19. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is29.1, implying annual growth of41.3%. Current consensus DPS estimate is21.7, implying a prospective dividend yield of5.0%. Current consensus EPS estimate suggests the PER is14.9.