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Admiral running out of steam, says Credit Suisse

Published: 06:58 03 Sep 2012 EDT

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Car and home insurance firm Admiral (LON:ADM) is running out of steam, according to Credit Suisse.

The Swiss broker has downgraded the stock to ‘neutral’ from ‘outperform’ despite Admiral announcing solid headline results on Thursday, including a seven per cent rise in half-year pre-tax profits.

However, it is concerned about the number of vehicles covered by Admiral, as well as heightened pressure on industry pricing and larger-than-expected international losses.

As a result, the broker cuts its target price to 1,250 pence from 1,300 pence, leaving just five per cent upside to the current price of 1,141.8 pence, down 44 pence today.

Having already risen 42 per cent so far this year, Credit Suisse analyst Christopher Esson does not see much scope for further upside.

“We believe the regulatory environment will provide increased uncertainty for the motor insurance market over the next six months,” he said.

“While Admiral is in the strongest possible position to withstand regulatory changes due to its large margin advantage over peers, we would still expect the uncertainty that is likely to accompany various regulatory reviews to weigh on sentiment,” Esson concluded.

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