Shore Capital reckons that while Admiral is priced for ‘significant growth,’ this is not reflected in its outlook, Citywire reports. The comments came after the car insurer updated investors on its half-year performance yesterday, posting a rise in turnover and profits.
Admiral’s share price surged yesterday as investors digested the results, gaining more than four percent and outperforming the broader UK market, with the benchmark FTSE 100 closing 1.4 percent lower. This morning, the shares have inched 0.09 percent higher to 2,117.00p as of 08:21 BST, as compared with about a 0.13-percent fall in the Footsie.
ShoreCap weighs in on Admiral
Shore Capital reaffirmed Admiral as a ‘sell’ yesterday, even as the company reported ‘excellent headline profits’ for the first half of the year. The company further announced that it will be paying an interim dividend of 63.0p per share, representing a normal dividend of 41.8p per share and a special dividend of 21.2p per share.
“Admiral has long traded on a premium to the rest of the UK non-life insurers, but we believe that this is not reflective of the actual outlook,” the broker’s analyst Paul De’Ath commented, as quoted by Citywire, adding that the business remained “fundamentally a UK motor insurer where Admiral is now a mature incumbent rather than a fast-growth challenger”.
The analyst reckons that while the FTSE 100 insurer remains priced for significant growth, “this does not reflect the medium-term outlook”.
Other analysts on car insurer
Keith Bowman at Interactive Investor meanwhile commented in a note that “from an investment view, the shares have underperformed the wider market recently, although traded largely in line with the sector”.
Peer Hunt reaffirmed the FTSE 100 group as a ‘hold’ yesterday, without specifying a target on the Admiral share price. According to MarketBeat, the blue-chip group currently has a consensus ‘hold’ rating and an average valuation of 2,080.40p.