AXA, one of Europe's largest insurers, may raise its earnings-per-share (EPS) growth target when it holds its investor day on September 15, according to analysts at Berenberg, a European investment bank. The expectation is based on the resilience of its AXA XL property and casualty unit and the ongoing benefit of annual share buybacks.
What's behind the expected upgrade?
AXA's current plan, covering 2024 to 2026, targets underlying EPS growth of 6% to 8% per year. Berenberg says expectations are shifting toward a higher range of 7% to 9% annually for the 2027-2029 period. The main driver is the company's continued share repurchase program, which reduces the number of shares outstanding. Because EPS is calculated by dividing profits by the number of shares, buying back shares boosts EPS even if total profits stay flat.
AXA XL, the company's commercial property and casualty arm, has also been performing steadily. That unit, which was acquired as part of the XL Group deal in 2018, has been a key contributor to AXA's overall profitability. Its consistent results give management confidence to set more ambitious targets.
Why share buybacks matter
Share buybacks are a common way for companies to return cash to shareholders. When a company buys its own shares, it reduces the supply of shares in the market, which can support the share price. It also increases the ownership stake of existing shareholders, since each remaining share represents a larger slice of the company.
For investors, a higher EPS growth target signals that management expects profits to grow faster than previously anticipated, or that the buyback program will continue to enhance per-share metrics. It's a sign of confidence in the business's future cash generation.
What it means for investors
If AXA does raise its target, it would be a positive signal for shareholders. A higher EPS growth target often leads analysts to revise their earnings estimates upward, which can support the stock price. It also suggests that the company sees enough strength in its core businesses to sustain growth over the next few years.
However, investors should remember that targets are not guarantees. They depend on market conditions, claims experience, and investment returns. AXA's insurance business is sensitive to natural disasters, economic cycles, and interest rates. A major catastrophe or a prolonged market downturn could derail even the most confident forecast.
For those who own AXA shares, the investor day on September 15 will be worth watching. The company may also provide updates on its capital management plans, including the size and timing of future buybacks. For those considering an investment, the event could offer clues about the company's long-term earnings power.
Broader context
AXA operates in a competitive European insurance market, where low interest rates have historically pressured investment income. In recent years, rising rates have helped insurers earn more on their bond portfolios, which has supported earnings. The company has also focused on cost-cutting and digital transformation to improve efficiency.
Berenberg's view is just one analyst's opinion, but it reflects a broader optimism about AXA's ability to deliver consistent growth. The company has a track record of meeting or exceeding its financial targets, which adds credibility to the possibility of an upgrade.
Investors should also consider the broader market environment. European insurers have generally performed well in 2025, supported by higher interest rates and strong underwriting results. If that trend continues, AXA's revised targets could prove achievable.
What to watch next
The key date is September 15, when AXA's management will present its new strategic plan. Investors will look for details on the EPS growth target, as well as any changes to dividend policy or buyback plans. They will also listen for commentary on the outlook for AXA XL and other key divisions.
If the target is raised, it could trigger a positive reaction in the stock. If it stays the same, that might disappoint some investors who were hoping for more. Either way, the investor day will provide a clearer picture of AXA's future direction.
For those interested in the broader insurance sector, AXA's moves often set the tone for other European insurers. A more ambitious target could signal confidence across the industry, while a cautious stance might raise questions about growth prospects.
As always, it's important to base investment decisions on your own financial situation and risk tolerance. News like this is informative, but it's not a recommendation to buy or sell any stock.
