Broker snap: Nomura encouraged by Admiral's underlying figures

30th Aug 2012 10:35

Nomura has reiterated its 'buy' rating and 1,300p target price for car insurance group Admiral highlighting the firm's strong first-half results and continued claims 'stability'."Admiral has reported PBT [profit before tax] 2% ahead of consensus; however, there has been an accounting change, which has effectively meant deferral of around GBP 10m of income in the 'other revenue' line; adjusting for this would imply earnings being 8% ahead of consensus," Nomura said in a research note on Thursday morning.The interim dividend of 45.1p per share, up 15% year-on-year, is some 9% ahead of consensus estimates.One negative point that the broker points out is that the growth in UK policies was slower than forecast with the run-rate of potentially 4% for the full year below the its 5% estimate."We are encouraged by the underlying results coming ahead of expectations, and although UK policy count is somewhat slower than our estimate, it is to be expected given more competitive market conditions in the UK," Nomura said. "Meanwhile, development of the ultimate loss ratios, especially for 2011, gives us comfort on Admiral's earnings growth."Shares were trading 2.27% lower at 1,168.9p by 10:31.BC