I’ve been watching the Aviva (LSE: AV.) share price closely, and it’s been doing something odd in the last few months.
As I write ahead of the market opening on Wednesday (23 September), the stock is up 78.6% to 706p. However, it hasn’t been all smooth sailing for investors with the shares jumping around throughout 2026. That includes a 3% decline in the past month.
Despite that, many analysts remain positive on the stock with consensus estimates implying further potential price rises from here. So, what’s really going on with the financial services group and could the stock be set to soar in 2027?
What’s really happening with Aviva
The current 706p share price isn’t far off the 52-week high of 740.6p and near levels last seen in 2007.
Strong results have been a key driver of share price performance over the last 12 to 18 months. This includes first-half 2026 operating profit jumping 24% to around £1.3bn, with earnings per share up roughly 10% in good news for shareholders.
Management pointed to UK general insurance performance and the Direct Line Group integration as key drivers of the successful result. But does the income case still stack up?
Crunching the numbers
While analyst 12-month price targets vary, and the consensus is sitting around 729p as I write, some are more bullish than others.
Take Berenberg for example. Analysts covering the stock estimate Aviva offers a prospective cash yield of 9% from its 2027 profits, and forecast annual dividend growth of 6.5% through to 2028.
This, combined with a dominant and growing position in UK property and casualty insurance, alongside strong forecast growth in UK retirement savings, has underpinned an 820p price target for the stock.
That implies 16.1% share price growth from current levels, before accounting for any potential increases in dividends.
Some of the other key takeaways from the Berenberg coverage were:
- UK general insurance accounts for roughly 40% of group operating profit, with market share expanded from 10% to 17% over six years.
- The company manages around 20% of UK workplace pension assets, a scale position in a roughly £850bn annuities market.
- Cumulative cash remittances of nearly £7.1bn are forecast between 2026 and 2028.
The risks worth weighing
The price-to-earnings (P/E) ratio of around 38.6 looks rich against historic insurer norms, although this isn’t necessarily the best measure for financial services groups.
Insurers like Aviva often benefit from higher rates, so any shift in Bank of England expectations could unsettle the shares in the short term. The UK general insurance market also remains fiercely competitive, and regulatory changes can quickly impact on the expected growth trajectory.
My verdict
I don’t currently own the stock, but I think the combination of a 5.7% dividend yield and mid-single-digit growth could see it push towards the 820p upper price target in 2027.
The recent dip feels more like a pause than a breakdown, and I think it’s worth considering by investors that are willing to take a view on interest rates and are seeking a strong dividend stock to add to their portfolios.
It’s far from the only income stock that has caught my eye, and there are other opportunities that I think deserve more attention right now…
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Ken Hall does not own shares in any of the companies mentioned.
This story originally appeared on Motley Fool
