Salomon Smith Barney cut its estimates on American International Group (AIG).
Analyst Ronald Frank says he no longer thinks it's realistic to target the insurance giant at a historically high 25% premium to the S&P 500 earnings multiple, which would exceed the stock's historic peak of about 10%.
Frank says AIG's near-term potential volatility has arguably increased, and he cut his $3.95 2003 earnings per share estimate to $3.75, based on what he thinks are conservative assumptions. He notes CEO Maurice Greenberg said he would be "disappointed" with normalized earnings per share growth (excluding the reserve charge) of 8%-10%.
Frank views the 70 cents per share after-tax reserve charge as a "rear view" look. He likes AIG's strong credit ratings and its intact, market-leading franchises, and is keeping his outperform rating. However, he slashed the $80 target to $60.