Goldman Sachs downgrades Admiral, upgrades Phoenix

(Sharecast News) - Goldman Sachs downgraded Admiral but upgraded Phoenix on Wednesday as it took a look at the European insurance sector. Admiral was downgraded to 'sell' from 'buy' and the price target cut to 2,920p from 3,954p.

Goldman noted that it upgraded the stock to 'buy' in July 2025 as it expected an inflection in pricing trends based on ONS data available at the time.

"This inflection, however, has yet to materialise," it said. "In addition, we are now lapping periods of frequency improvements, and as a result we expect burn costs to increase. Pricing versus burn-cost dynamics therefore read negatively for margins into 2026, where we reduce our earnings per share estimate by circa 17%."

Goldman also said that peripheral risks have been emerging, including rising commodity prices and chip shortages, which could increase claims inflation, and the introduction of autonomous vehicles, which could result in shifting profit pools over the long term.

"Given what we view as downside risks to consensus earnings estimates, emerging near-term inflation risk and longer-term structural risks, we reduce our price target by circa 26% and downgrade Admiral to sell (from buy)."

GS pointed out that since being added to the buy list on 2 July 2025, the shares are down around 7% versus the FTSE World Europe up around 13%, "in our view driven by continued lower pricing".

In the same note, Goldman upgraded Phoenix to 'neutral' from 'sell' and lifted the price target to 752p from 593p based on what it now sees as lower downside risk on leverage and shareholder's equity.

It said Phoenix provides one of the highest capital generation yields in the sector - 14% versus sector average of 10% - and also generates circa £0.5bn of excess cash per annum.

"Phoenix has now partially addressed two of the bear points on the shares including: 1) a debt reduction program, and 2) committing to a growing shareholders' equity (prior to market movements) by 2027."

Goldman said it believes that M&A could further help here.

The bank pointed out that since being added to the sell list on 18 September 2024, Phoenix shares are up 38% versus FTSE World Europe up 22%.

"In our view, while leverage and shareholders' equity have been the main debates, the market responded well to the company's actions to partially address these, driving this performance."

In the same research note, Goldman downgraded SCOR to 'neutral' from 'buy' and Swiss Re to 'sell' from 'neutral'. It also upgraded ASR to 'buy' from 'neutral'.

At 0950 GMT, Admiral shares were down 1.5% at 3,030p, while Phoenix was up 0.5% at 736.50p.