Admiral: Reviewing Competitor Results Ahead Of H1 Report
(Preview) Company Update (ADM LN) (Buy)
Summary
Admiral shares fell 26% in three trading days in July after two competitors warned on profits; it reports H1 results next week.
Competitors' H1 results showed large claim cost inflation, profit margin declines and relatively flat volumes. Admiral is likely similar.
Competitors have raised their pricing to fully reflect inflation and kept their old margin targets, implying a benign market for Admiral.
Ultimately, the sector is cyclical but long-term profitability is intact, and Admiral should gain when the rebound comes.
With shares at 1,965.9p, we expect a total return of 104% (26.9% annualised) by 2025 year-end. The Dividend Yield is 7%+. Buy.
Introduction
Admiral Group PLC, the #1 U.K. motor insurer which has been Buy-rated in our coverage since October 2020, is scheduled to release its H1 2022 results next Wednesday (August 10).
Admiral shares fell 26% (in GBP in London) between July 14 and July 18, after profit warnings at competitors Sabre Insurance and Direct, but have regained …