Investing.com -- Goldman Sachs has downgraded Allianz SE (ETR: ALVG ) to “neutral” from “buy,” citing a more balanced risk-reward profile after a strong period of share price appreciation.

Since being added to Goldman’s Buy List in September 2024, Allianz shares have risen around 22%, outperforming the FTSE World Europe and STOXX600 indices by roughly 15 percentage points.

Including dividends, total return outperformance is approximately 17 percentage points as of mid-May.

This rally has pushed Allianz’s valuation to the upper end of its historical range. The stock now trades at a 12-month forward price-to-earnings ratio of 12.3x, above its 10-year average of 10.1x.

With limited near-term catalysts and the valuation already stretched, Goldman sees little additional upside.

Operationally, Allianz continues to perform well. Its property and casualty margins have improved, supported by a retail-focused business mix.

At its December 2024 Capital Markets Day, Allianz introduced a 2027 combined ratio target of 92–93%, which Goldman views as achievable.

Asset management (AM) also posted a strong first quarter in 2025, with net inflows of €29 billion, 19% above consensus.

However, flows have slowed in Q2 to mid-single-digit billions through mid-May, as market volatility and a weakening U.S. dollar, following U.S. tariff announcements, dampen the outlook.

Given the U.S. exposure of Allianz’s AM business, these macro developments pose challenges to AUM growth and flow momentum.

In response to Q1 results, Goldman revised its financial projections. Its 2025 EPS estimate has been cut by 8%, driven equally by lower operating profit and weaker non-operating income.

Operating earnings were reduced due to a higher P&C attritional loss ratio and softer AM performance, while non-operating income was hit by mark-to-market impacts. EPS estimates for 2026–2029 were lowered by roughly 3% on average.

Despite the downward revisions, Goldman’s forecasts remain broadly aligned with Allianz’s 2025–2027 financial targets.

The brokerage expects a core EPS CAGR of 8.5%, within Allianz’s target range of 7–9%.

However, its updated EPS estimates for 2025–2027 are now 1–3% below Visible Alpha consensus, mainly due to more conservative assumptions on P&C and AM profitability.

Goldman has also lowered its 12-month price target for Allianz from €393 to €374. One-third of the reduction is due to lower earnings estimates impacting the 2026 adjusted tangible book value, while the rest reflects a reduced valuation multiple (1.4x vs. 1.45x), tied to a slightly lower expected earnings growth rate.

The target is based on a price-to-adjusted tangible book value versus return on ATBV framework, with a projected 2026 return of 15.4%.