Last year Aviva (LSE:AV) share price has FTSE100. The stock is up 25% over that time period, including a nearly 10% gain in 2024. But as we enter the second half of the year, I think there are several points that investors should pay attention to, as they could either fuel the rally or cause a pullback. Here’s my prediction.
Potential for reforms
Part of Aviva’s activities are related to the insurance market and investment management. This is interesting because one of the things the Labour Party, as the new government, wants to do is introduce 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 fears that Labour would scrap the lifetime pension, but that fear has been dispelled. This is a good thing, because a cap could have meant that top earners above a certain amount would no longer contribute to the pension.
There are rumours that the current system of refunds into pension pots depending on the level of income tax paid could be simplified to a single lump sum. I think this would be good for Aviva. Any simplification of the rules should make it more convenient for individuals and companies to invest. This in turn could contribute to higher earnings and therefore a better share price.
The risk, in my view, is that policy measures will be blocked in Parliament or that there will be no real change after this year.
The impact of the results
We will receive the half-year results in mid-August. These will be another important driver for the share price in the coming months. In May we had the first quarter results, which showed that business continues to be good.
General insurance premiums rose 16% to £2.7 billion compared to the same period last year. The asset management division performed well, with net inflows of £2.7 billion (up 15% year-on-year). When money flows into the business from clients, it can be used to earn commissions and fees from the investment.
If this strategy is confirmed to be maintained in August, I think the share price could rise. This would also coincide with the dividend announcement. Given the current yield of 7.03%, income investors will be watching this closely.
Even though the results have the potential to boost the stock, the release could be negative. The company could be struggling with cash flow issues, investor outflows, or other problems that come to light.
From here positive
All in all, I think Aviva shares can continue to rise over the next six months. I am convinced that the 10% gain in the first half can be matched in the second half as the pension simplification and half-year results provide positive momentum. This would drive the share price to 530p.
Given my view, I am thinking of adding it to my portfolio.
The post My Aviva share price forecast for the second half of 2024 first appeared on The Motley Fool UK.
Further reading
Jon Smith does not own any of the stocks mentioned. The Motley Fool UK does not own any of the stocks mentioned. The views expressed in this article about the companies mentioned in this article are those of the author and as such 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 broad range of insights makes us better investors.
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