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RBC Capital Markets hikes target price on Admiral
27th Aug 2020 15:37
(Sharecast News) - Analysts at RBC Capital Markets upped their target price on insurer Admiral Group from 2,100.0p to 2,400.0p on Thursday following the firm's interim results.
RBC Capital said Admiral's first-half results had led it to increase its earnings estimates for 2020 by 15%, with its 2021-22 estimates also increasing by an average of 10%.
The Canadian bank said the moves were largely driven by higher reserve releases and had resulted in a 9% increase to both its 2020-22 book value per share and dividend estimates.
RBC said risks to its thesis included higher reserve releases, signs of earlier-than-expected profitability in the group's international insurance and price comparison operations and higher-than-expected claims inflation eroding profitability in Admiral's UK motor business.
"In the upside scenario, we assume that Admiral achieves growth of 20% in its UK business with no reduction in other revenue per vehicle. In addition, we factor in a sharp turnaround in the International operations with it achieving break-even from 2018," added the analysts, which also maintained their 'sector perform' rating on the stock.
RBC Capital said Admiral's first-half results had led it to increase its earnings estimates for 2020 by 15%, with its 2021-22 estimates also increasing by an average of 10%.
The Canadian bank said the moves were largely driven by higher reserve releases and had resulted in a 9% increase to both its 2020-22 book value per share and dividend estimates.
RBC said risks to its thesis included higher reserve releases, signs of earlier-than-expected profitability in the group's international insurance and price comparison operations and higher-than-expected claims inflation eroding profitability in Admiral's UK motor business.
"In the upside scenario, we assume that Admiral achieves growth of 20% in its UK business with no reduction in other revenue per vehicle. In addition, we factor in a sharp turnaround in the International operations with it achieving break-even from 2018," added the analysts, which also maintained their 'sector perform' rating on the stock.