AA PLC (LON:AA.) shares were driven lower on Monday morning after Barclays analysts downgraded the auto insurer amid competition and value concerns.
Shares have jumped 75% since their February’s post-strategy update troughs to 119p, which Barclays reckons is now a “reasonable” figure.
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Analysts added that there are “limited catalysts” over the next 12-18 months to drive the share price too much higher.
As for next month’s update, nothing surprising is expected to come from it, with the bank forecasting a reiteration of its full-year guidance.
Barclays’ biggest concern seems to be competition, though. It estimates that motor premiums fell 11% year-on-year in the second quarter which, if true, could add some risk to its insurance growth estimates.
“Although insurance was 18% of group EBITDA in FY18, it accounts for c50% of our total £mln EBITDA increase from FY19- 23,” read the note to clients.
The bank downgraded AA to ‘equal weight’ from ‘overweight’ but kept its 150p price target in place.
Shares were down 4.3% to 119p in early deals on Monday afternoon.