The Cardiff-based motor insurer gave multi-year earnings targets for the first time, prompting analysts to raise their recommendation.
RBC Capital Markets has upgraded Admiral Group Plc (LSE:ADM), the Cardiff-based motor insurer, to "outperform' from 'sector perform', lifting its price target to 3,560p from 3,100p, after the company set out multi-year profit and earnings-per-share growth targets for the first time in its history.
The bank's analysts said Admiral's decision to commit to higher earnings-per-share growth over 2025-30 than the 7.6% compound annual growth rate it delivered over the previous five years was the key driver of the more positive stance.
Admiral also set a target to more than double profits from its non-motor divisions, which include home, travel, pet and European insurance, by 2028.
RBC raised its target price-to-earnings multiple from 13 times to 14 times its 2027 earnings estimate, citing the company's willingness to make longer-term commitments, though it noted this remained a material discount to historical valuations.
The analysts acknowledged that near-term pressures in UK motor insurance persist, forecasting a further dip in that division's profits in 2026 as the benefit of recent price increases takes time to flow through.
UK motor insurance premiums, as measured by official consumer price index data, rose 4% year-on-year in January 2026, the first positive reading since December 2025, but remain around 10% below their peak in February 2024.
RBC said it expected group profits to be broadly flat in 2026, with stronger performance in other lines largely offsetting the motor headwinds, before returning to growth from 2027.
The bank also noted Admiral's plan to shift from special dividends to share buybacks, which it said would support earnings-per-share growth, though it reduced its dividend forecasts by double-digit percentages to reflect the change.
A separate catalyst flagged by analysts was Admiral's intention to submit its internal capital model for regulatory approval, which could free up an additional 30 pence per share in capital returns once approved, likely in calendar 2027.
Risks cited include the uncertain trajectory of UK motor pricing, Admiral's mixed track record in European markets including France, Italy and Spain, and the competitive conditions in home insurance following a period of benign weather claims.