RBC Capital downgrades Admiral Group to 'sector perform'

19th Jun 2026 07:47

(Sharecast News) - RBC Capital Markets downgraded insurance outfit Admiral Group from 'outperform' to 'sector perform' on Friday and cut its price target on the stock to 3,450p from 3,560p, saying it was taking a more cautious stance ahead of the insurer's half‑year results on 6 August.

The Canadian bank said Admiral shares have already performed well this year and that the recovery in UK motor remains steady but slow, noting that it has now taken a more conservative view on volumes and margins in the first half, with only modest knock‑on effects to outer‑year forecasts.

RBC noted that UK motor pricing has turned positive but remains modest, with CPI data showing only a 4.5% rise year‑to‑date, likely still below claims inflation. However, it expects H1 to be too early to see any meaningful margin benefit, with last year's rate cuts still earning through.

The broker cut UK motor profit forecasts by 5% for FY26, with smaller reductions for FY27 and FY28. At group level, it now expects FY26 profit to fall 8% year‑on‑year, compared with a previous forecast of a 2% decline. Non‑motor profit for 2026 has been reduced by 14%, though later years were largely unchanged. As a result, RBC trimmed earnings per share estimates by 6%, 4% and 2% for FY26-28, leaving its FY25-28 compound annual growth rate at 2.6% - below management's ambition for faster growth.

RBC kept its 14x FY27 target multiple, supported by a multi‑stage DCF and said Admiral now trades broadly in line with peers after recent outperformance, with a further re‑rating requiring clearer evidence of a stronger turn in UK motor or a bigger contribution from non‑motor lines, which it does not expect before 2028.

Reporting by Iain Gilbert at Sharecast.com