RSS Galvan Chartbreaker - EU RULING BOOST FOR ADMIRAL GROUP (1,698p) - 9th May 2011
By Ed Woolfitt | 09 May 2011, 10:51 BST
Ed Woolfitt, Head of Trading at Galvan
At the beginning of March, car insurer Admiral Group said that profit before tax had accelerated to £266m in 2010 from £216m the year before on turnover up 47% to £1.58bn. UK car insurance profits were up 33% at £275.8m as the firm enjoyed trading conditions more favourable than any time since 2000. The non-UK car business lost £8m. Vehicle count grew 32% to around 2.5m vehicles covered by Admiral brands, making the firm one of the top three UK private motor insurers, with 10% of the UK market. Fundamentals have also been boosted: from December 2012 the EU has ruled that insurers cannot offer lower premiums to women solely on the basis of gender.
There are two big fundamental factors that have bought Admiral Group shares to the attention of Galvan Research. Firstly the significant profits growth clearly illustrates that the group is a non cyclical play, and secondly there are prospects of even greater revenue and profits growth following the EU ruling on gender. These developments mark Admiral shares out as a buy.
The two big technical plus points for Admiral Group in the recent past have come from a double bottom rebound off 1,550p in March, with last month's 20/50-day moving average golden cross helping lift the shares back to 1,750p on Friday. A retest of 1,750p is expected while the 20-day moving average holds at 1,644p.
| Dream Scenario | Shares in Admiral receive an added boost from the EU gender ruling coming into play next year. | Stock | Admiral Group |
| Nightmare Scenario | Admiral shares have already factored the additional fundamental plus points. | Epic Code | ADM |
| Price Target | 1,750p | Year High | 1,753p |
| Stop Loss | 1,644p | Year Low | 1,238p |
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Source: Galvan Research and Trading
