Wells Fargo cuts American International Group stock price target on ROE outlook

Wells Fargo has reduced its price target on American International Group (AIG) stock from $89 to $85 while keeping an Equal Weight rating. The downgrade is based on AIG's outlook for return on equity (ROE), with Wells Fargo projecting just over 11% returns for the years 2026 through 2028, falling short of the 10-13% target range.

The insurer reported a slight decline in its shares after hours, despite delivering adjusted earnings of $2.00 per share in the second quarter of 2026, beating analyst expectations. AIG's revenue for the quarter also exceeded estimates at $7.5 billion. The company's strong financial performance, driven by improved underwriting and investment results, has been noted by investors.

However, the firm's focus on profitability and the challenging market for commercial lines insurers, trading at a lower valuation multiple of 9 times 2027 earnings per share, may hinder valuation improvement. Only 10 analysts have recently revised their earnings estimates downwards for AIG.