AXA Reports Results That Are Better Than Consensus; Shares Undervalued

AXA has reported results for the first half of the year that show the business is ahead on EBIT, according to estimates collected by PitchBook. We raise our fair value estimate marginally to EUR 29.90 as we incorporate the buyback. We maintain our no moat rating. The results reported on Aug. 3 show it is a business that has strength. For example, management announced a EUR 1 billion buyback plan and there was double-digit underlying earnings growth. Solvency is robust at 227% and is positively correlated to interest rates. AXA continues to focus on its pillars for growth, reducing its exposure to natural catastrophes in property and casualty reinsurance, and lowering traditional savings business exposure. The preference is for pure protection, demonstrated by commercial property and casualty insurance, health insurance, and also asset management growth. These areas of expansion all point to lower earnings volatility, and technical and fee-based income with lower capital requirements.