The last five years have been phenomenal for Aviva (LSE: AV.) Price of shares. The insurance giant used higher interest rates to boost earnings. The result was almost 12% market growth from July 2020.

Looking at analysts’ forecasts, the most sanguine forecast over the next 12 months is that Aviva’s actions can achieve up to 7 pounds. But looking beyond one year, there may be a path of up to 10 pounds if the company can reach some milestones.

Long -term potential

In order for the price of Aviva to reach 10 pounds, a company worth $ 19 billion must expand to 30 billion pounds. Needless to say, building the values of shareholders on this scale is not an basic feat. But now, when the company successfully ended the takeover of the direct line, the management could exploit it as a powerful catalyst.

Of course, it depends on the contract actually providing expectations. If everything goes smoothly, the company predicts:

• Additional 125 million GBP of product sales revenues
• 125 million pounds of annual cost savings within three years
• 70% of operating profits from capital operations (compared to 56% today)
• 13% net insurance margin by 2026

The addition of a direct line also gives Aviv control about 20% of the British motor insurance market and 17% of the wider real estate insurance market, ensuring significant scale economics. After all, the more contributions seem, the wider it can spread your risk and offer more competitive rules.

But is it enough to build £ 11 billion in shareholders?

Crunch of numbers

In the first quarter of 2025, the combined company indicator is 96.6%. This implies net insurance margin of 3.4%. And if the management is not too ambitious, increasing this to 13% by the end of next year, then on the basis of current insurance projects, Aviva’s earnings can as a result double.

Of course, it all depends on the takeover of the direct line without any problems. And historically taking over this scale, they rarely ended as a completely liquid process. Even if there are no delays in the integration and sale of cross -country products with a fresh customer base, expected synergies saving costs may simply not materialize.

Lower line

Submission of profits certainly paves the way to almost enjoying the stock price, if Aviva can keep these profits in the long run. However, this potential may already be partly baked at the price of the shares. After all, insurance shares are currently listed in relation to the price to profit 27.

In other words, the success of the direct line itself is probably not enough to exceed the price of Aviva shares to 10 GBP. Instead, the company will still have to boost its market share and earnings to achieve this milestone. And it can take at least a few years.

Nevertheless, taking into account the potential, it can be an opportunity at which it is worth looking at the people of a long -term patient.