Numis pleased with Q1 UK customer growth at Admiral

14th May 2014 12:48

Admiral's first-quarter results were met with a negative reaction from the market on Wednesday, but Numis Securities maintained a positive stance on the car insurer, saying it sees early signs of growth in the UK.Numis kept a 'buy' rating and 1,710p target price.The broker said that it was surprised by the 2% growth in UK customers to 3.08m in the first quarter, having pencilled in no growth over the full year."Customer count has been broadly flat since the middle of 2012, in line with Admiral's strategy to prioritise margin over volume," said Analyst Nick Johnson."It is too early to judge whether this growth will continue during the remainder of 2014, but we think Admiral's ongoing margin advantage means it is poised for material market share growth from around 11% currently. This upside potential is a key component of our positive investment thesis," he said.While the UK pricing environment remains a "significant drag", Johnson said that Admiral's comments imply a less negative environment than recently suggested by recent Confused.com and AA rate surveys."We continue to think that near-term earnings and dividends remain underpinned by positive reserve developments, with significant medium-to-long term upside potential from UK and International growth."The stock was down 0.6% at 1,439p by 13:09.BC