Broker tips: Admiral, Concurrent Technologies, Vodafone

(Sharecast News) - RBC Capital Markets downgraded Admiral Group on Thursday to 'sector perform' from 'outperform' and slashed its price target on the stock to 3,100p from 3,600p. RBC said it was updating forecasts mainly for lower special dividends, as the company will buy shares in the market to fund its share scheme, versus a previous approach to issue shares.

"We lower our TP from 3,600p to 3,100p, based on 13x PE from 15x versus the long-run average of 17x," it said. "This equates to an unchanged target dividend yield of circa 6%, in-line with Admiral's long-run average.

"Stronger signs of a cyclical turn and a return to material earnings per share growth are likely to be needed for sustained outperformance, and we downgrade to sector perform."

RBC also said it has built in more conservatism to its view of the H2 2025 top-line, feeding into FY26/27 margins in UK motor, to reflect an ongoing competitive environment. "EPS cuts are 4% for FY26E/27E, 1% for FY25E," it said.

"These are on top of changes we made mid-December which lowered EPS by 1%/5%/7%. Lower earnings also feed into lower ordinary dividends on top of the change to specials for 3%/12%/14% cuts to total FY25E/26E/27E DPS."

Analysts at Berenberg initiated coverage on embedded computer products manufacturer Concurrent Technologies with a 275p target price and a 'buy' rating on Thursday, calling the group a "top 'PIC'".

Berenberg said Concurrent Technologies stands at "the intersection of high growth defence markets and digitisation" as a designer and manufacturer of rugged computing systems for the defence industry - including high-performance single-board computers (SBCs) and plug-in cards (PICs).

The German bank said Concurrent's recent strategic shift, enacted by new management, has effectively capitalised on "favourably changing conditions" in the firm's large-end markets.

"That story remains in its early stages and the benefits of those dynamics are set to crystalise in the coming years - particularly as Concurrent continues its recent momentum in contract wins and as its recent record design wins begin to translate into revenue," said Berenberg. "We expect significant long-term potential for the company and it is a top 'PIC' for us."

Deutsche Bank lifted its price target on 'buy' rated Vodafone on Thursday to 150p from 140p, noting that the shares had enjoyed somewhat of a renaissance since the bank's last note and first-half results, which saw guidance and the dividend raised, a year earlier than DB expected.

"The rally (+45% over a year, 20% since our mid Oct note), can be accounted for by similar at Vodacom (+39% in EUR) and a much greater rise (from a very low base) of the group's European stub whose equity is still 30% estimated free cash flow (ex spectrum/restructuring but also ex £700m of UK synergies)," DB said.

The bank said improving operations, particularly in Germany, and the cumulation of €2bn annual buybacks are a further assist.

"The market dislikes sum-of-parts. Vodafone may make the math easier via associate disposals," it said, adding that in the near term, free cash flow is boosted by Kenyan telecom Safaricom.