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RBC Capital downgrades Admiral to 'sector perform'
(Sharecast News) - RBC Capital Markets downgraded Admiral Group on Thursday to 'sector perform' from 'outperform' and slashed the price target to 3,100p from 3,600p. The bank 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."
At 1240 GMT, Admiral shares were down 1.6% at 2,900p.
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