Credit Suisse stays at 'underperform' on Admiral Group, points to inflation and regulations
Admiral Group
2,750.00p
17:15 10/05/24
Analysts at Credit Suisse reiterated their 'underperform' recommendation on shares of Admiral Group in anticipation of slower growth, new regulations and accelerating inflation.
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The Swiss broker estimated Admiral's organic vehicle growth rate at 4.1%, forecasting that it would decline to 1% in 2021 due to its relative pricing differential and more flexible policies elsewhere.
Its traditionally lower non-shopper rate of 14.1%, versus rivals on 16.9% also left it more exposed to the upcoming FCA pricing guidelines due to a lower ability to retain clients.
Then there were the fast increases in used car prices which in April had reached a clip of 8.1%.
Lastly, and from a valuation viewpoint, the insurer's shares were trading on a 2021 price-to-earnings multiple of 20.4, which was 2.1 standard deviations greater than their five-year average.
Its shares were also trading on a PE premium of two times versus sector peer Direct Line, the broker said.
Credit Suisse also kept its 310.0p target price for the shares unchanged.