Source: Sharecast
In a note published on Friday, the broker cut its rating to ‘sell’ from ‘reduce’, and upped its target price to 2,350p from 2,270p.
It said: "The outlook for UK motor underwriting margins is starting to deteriorate, albeit from a high base, as rates continue to soften.
"We believe discipline will be required across the UK motor market in the second half of 2025 to avoid a sharp deterioration in underwriting margins in 2026. Admiral has gained considerable market share in UK motor over the past two years and it should be interesting to see how far it will go to protect this."
It concluded: "We unwind our discounted cash flow model to end-2025 full year, which lifts our target price...and values Admiral at 12x 2026 P/E. In contrast, the stock currently trades at 18x 2026 P/E.
"Given the notable premium to our fair value assumption, and with around 30% downside to our new target price, we downgrade our rating from ‘reduce’ to ‘sell’.
"While the dividend yield is attractive, we believe it is more than offset by the valuation premium at which the shares currently trade."
As at 0915 BST, shares in the blue chip were down 2% at 3,372p.