Investment accounts
Adult accounts
Child accounts
Choosing Fidelity
Choosing Fidelity
Why invest with us Current offers Fees and charges Open an account Transfer investments
Financial advice & support
Fidelity’s Services
Fidelity’s Services
Financial advice Retirement Wealth Management Investor Centre (London) Bereavement
Guidance and tools
Guidance and tools
Choosing investments Choosing accounts ISA calculator Retirement calculators
Share dealing
Choose your shares
Tools and information
Tools and information
Share prices and markets Chart and compare shares Stock market news Shareholder perks IPOs and placings
Pensions & retirement
Pensions, tax & tools
Saving for retirement
Approaching / In retirement
Approaching / In retirement
Speak to a specialist Creating a retirement plan Taking tax-free cash Pension drawdown Annuities Investing in retirement Investment Pathways
Berenberg lifts Admiral price target
(Sharecast News) - Admiral rallied on Monday as Berenberg lifted its price target on the shares to 2,973p from 2,961p after results last week. "While the share price reaction to Admiral's FY23 results was muted on Thursday - down by circa 2% - there were plenty of reasons to be very optimistic about the outlook and we are raising estimates strongly in 2024 and 2025, up by 38% and 27% respectively," the bank said.
"We believe the hesitancy of investors to keep buying Admiral is driven by a nervousness that UK motor insurance prices will fall. While this is a risk, in our view, investors did not fully appreciate how far ahead in pricing Admiral is versus the rest of the market."
It noted that Admiral beat by 19% on motor premiums in the second half and said this was all driven by pricing.
"Admiral raised prices by 37% in FY23, well ahead of the market average 25%, and this gives Admiral scope to cut prices a little, while maintaining excellent margins and growing market share."
The bank said the level of pricing achieved by Admiral in 2023 was "outstanding" and bodes extremely well for profitability over the medium term.
Admiral reported a combined ratio of 81.2% in H223, which is already a strong starting point, it said. However, Berenberg estimated that the combined ratio will fall towards the low 70s in 2024.
"Admiral provided stable guidance on reserve releases, at circa 20pt, and guided to the expense ratio falling to 18%. As a result, we expect a strong step-up in earnings, rising to above £760m in profit before tax for the next two years, which will be record earnings."
Berenberg kept its rating at 'hold' on the shares but said it would be a buyer into any weakness.
"If pricing falls in the UK then we expect the multiple Admiral trades on to come down; however, this is offset by very strong EPS upgrades," it said. "We are on the more positive side because Admiral is only trading on 13x-14x EPS (2024-27E)."
The bank noted that Admiral trades in a P/E range of 15x-18.7x, and hence a de-rating from the top end to bottom end of the range would lead to a circa 20% fall in the share price.
At 1520 GMT, the shares were up 3.5% at 2,663p.
Share this article
Related Sharecast Articles
Important information: This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice. When you are thinking about investing in shares, it’s generally a good idea to consider holding them alongside other investments in a diversified portfolio of assets. Past performance is not a reliable indicator of future returns.
Award-winning online share dealing
Search, compare and select from thousands of shares.
Expert insights into investing your money
Our team of experts explore the world of share dealing.
Policies and important information
Accessibility | Conflicts of interest statement | Consumer Duty Target Market | Consumer Duty Value Assessment Statement | Cookie policy | Diversity and Inclusion | Doing Business with Fidelity | Fidelity gender pay report | Investing in Fidelity funds | Legal information | Modern slavery | Mutual respect policy | Privacy statement | Remuneration policy | Security | Statutory and Regulatory disclosures | Whistleblowing policy
Please remember that past performance is not necessarily a guide to future performance, the performance of investments is not guaranteed, and the value of your investments can go down as well as up, so you may get back less than you invest. When investments have particular tax features, these will depend on your personal circumstances and tax rules may change in the future. This website does not contain any personal recommendations for a particular course of action, service or product. You should regularly review your investment objectives and choices and, if you are unsure whether an investment is suitable for you, you should contact an authorised financial adviser. Before opening an account, please read the ‘Doing Business with Fidelity’ document which incorporates our client terms. Prior to investing into a fund, please read the relevant key information document which contains important information about the fund.
This website is issued by Financial Administration Services Limited, which is authorised and regulated by the Financial Conduct Authority (FCA) (FCA Register number 122169) and registered in England and Wales under company number 1629709 whose registered address is Beech Gate, Millfield Lane, Lower Kingswood, Tadworth, Surrey, KT20 6RP.