Admiral: Unfairly Dragged Down By U.K. Politics & Peer Results

(Preview) Company Update (ADM LN) (Buy)

Summary

• Admiral shares have fallen below 2,000p for the first time since H1 results, losing 8% since last Thursday - we believe unfairly.

• Key developments in the past few weeks were a poorly-received new U.K. "mini-budget" and H1 results from niche competitor Saga.

• The weaker U.K. pound and higher government bond yields after the "mini-budget" have little real impact on Admiral’s business.

• Saga's results actually demonstrated how new regulations are hurting Admiral's competitors and how the industry is stabilizing.

• With shares at 1,950.9p, we expect a total return of 124% (31.4% annualised) by 2025 year-end. The Dividend Yield is 8%. Buy.

Introduction

We review Admiral Group after shares fell below 2,000p on Tuesday (September 27), for the first time since H1 2022 results on August 10, including a loss of 8% since last Thursday. Two developments drove the decline in Admiral shares in our view:

• The British pound falling and U.K. interest rates rising significantly, especially after a governmen…