Broker tips: Admiral Group, Meridian Mining, REA Holdings

(Sharecast News) - RBC Capital Markets downgraded insurance outfit Admiral Group from 'outperform' to 'sector perform' on Friday and cut its price target on the stock to 3,450p from 3,560p, saying it was taking a more cautious stance ahead of the insurer's half‑year results on 6 August. The Canadian bank said Admiral shares have already performed well this year and that the recovery in UK motor remains steady but slow, noting that it has now taken a more conservative view on volumes and margins in the first half, with only modest knock‑on effects to outer‑year forecasts.

RBC noted that UK motor pricing has turned positive but remains modest, with CPI data showing only a 4.5% rise year‑to‑date, likely still below claims inflation. However, it expects H1 to be too early to see any meaningful margin benefit, with last year's rate cuts still earning through.

The broker cut UK motor profit forecasts by 5% for FY26, with smaller reductions for FY27 and FY28. At group level, it now expects FY26 profit to fall 8% year‑on‑year, compared with a previous forecast of a 2% decline. Non‑motor profit for 2026 has been reduced by 14%, though later years were largely unchanged. As a result, RBC trimmed earnings per share estimates by 6%, 4% and 2% for FY26-28, leaving its FY25-28 compound annual growth rate at 2.6% - below management's ambition for faster growth.

RBC kept its 14x FY27 target multiple, supported by a multi‑stage DCF and said Admiral now trades broadly in line with peers after recent outperformance, with a further re‑rating requiring clearer evidence of a stronger turn in UK motor or a bigger contribution from non‑motor lines, which it does not expect before 2028.

Analysts at Berenberg initiated coverage of Meridian Mining with a 'buy' rating and a 168p price target, saying the recently listed group offers strong upside as it develops the Cabaçal gold‑copper‑silver project in Brazil.

Berenberg, which sees around 89% potential upside from current levels, said Meridian was taking a low‑risk approach to bringing Cabaçal back into production, shifting the historic underground mine to a shallow open‑pit operation with permitting already well advanced. The initial 2.5mtpa plant, rising to 4.5mtpa from year four, gives early access to high‑grade ore and supports what Berenberg called "compelling" economics.

Over the first five years, Berenberg expects annual output of roughly 18kt copper, 92koz gold and 153koz silver, with life‑of‑mine averages only slightly lower. Low upfront capex of around $273m and a life‑of‑mine underlying earnings margin of about 67% underpin a net present value of $1bn, a 95% IRR and a payback of roughly one year.

Berenberg added that exploration offers further upside, with a recent resource upgrade pointing to at least four more years of mine life and significant potential across the wider Cabaçal belt. It also highlighted earlier‑stage prospects at the Jaurú and Araputanga belts, which could host similar mineralisation.

The German bank also pointed to a series of catalysts over the next two years as the project moves through the so‑called Lassonde Curve, including a definitive feasibility study in late 2026, early works in 2026-27, a final investment decision and funding in early 2027, construction later that year and first production targeted for the fourth quarter of 2028. Berenberg expects these milestones to drive the shares closer to 1x net asset value, from around 0.53x today.

Canaccord Genuity has reiterated a 'speculative buy' rating on palm oil producer REA Holdings despite recent falls in the stock, predicting that the share price could still more than double from current levels.

The shares, which have fallen 12% over the past month, including a 6% fall on Friday to 106p, have the potential to reach 260p, according to Canaccord Genuity, which said growth prospects were not currently reflected in the price.

An AGM statement from the company last week revealed broadly stable operations over the first five months of 2026, with average realised crude palm oil prices broadly in line with last year but ahead of full-year projections. This, Canaccord Genuity said, could indicate potential upside later in the year if current conditions persist.

"We make no changes to our forecasts following the update. The company continues to perform in line with expectations, supported by solid operational delivery and a favourable pricing environment. We continue to expect REA to deliver a strong FY26, with production weighted towards H2 and earnings underpinned by firm palm oil prices," Canaccord Genuity said.

The broker, however, did highlight ongoing regulatory uncertainty surrounding export policies in Indonesia, where REA cultivates oil palms in East Kalimantan, given its potential impact on realised pricing.

"Although quarry development has progressed more slowly than initially anticipated, we continue to view this segment as a key mid-term value catalyst. Combined with the group's highly cash-generative plantation operations, this underpins our view that the stock remains undervalued," Canaccord Genuity said.