Insurance Australia Group Ltd (ASX: IAG) shares were strong performers in April.
During the month, the insurance giantâs shares rose a sizeable 6.6%.
This means that IAG shares are now up over 10% since this time last year, which compares favourably to the 0.2% decline recorded by the ASX 200 index over the same period.
Why did IAG shares have a strong month?
Interestingly, IAG shares smashed the market last month despite there being no news out of the company.
However, it is worth noting that IAG wasnât the only insurance share rising. It seems that investors were piling into the industry on the belief that higher interest rates will support strong earnings in the near term.
For example, QBE Insurance Group Ltd (ASX: QBE) shares were also on form and rose 6% in April.
Can IAG keep rising?
Brokers appear somewhat unsure on where IAG shares are heading from here.
Citi and Macquarie see scope for IAG to keep rising. They both have the equivalent of buy ratings and $5.50 and $5.60 price targets, respectively, on its shares. This suggests that they could rise by ~10% from current levels.
Citi believes âthe story of building top line momentum and expanding margins is intact.â
Over at UBS, its analysts are far less positive. Last month, the broker retained its sell rating and $4.30 price target on the company’s shares. This implies potential downside of approximately 14% for investors.
The broker believes that recent stormy weather will push claims up and weigh on its earnings. In addition, the broker believes IAG shares are expensive at the current level.
Time will tell which broker makes the right call on this insurance giant.
The post Why were IAG shares such a good investment in April? appeared first on The Motley Fool Australia.
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More reading
- Are dark clouds gathering over the IAG share price?
- Did you buy $4,000 of IAG shares 5 years ago? Hereâs how much passive income youâve earned
- Why the IAG share price outperformed the ASX 200 in March
- Is IAG stock a good defensive ASX 200 buy right now?
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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