From ADVFN (RSA BUY with target 510p):
"Nomura upgraded Admiral to ‘buy’ from ‘neutral’ and lifted the price target to 2,325p from 1,630p as it took a look at UK non-life insurers.
The Japanese bank’s two key reasons for upgrading the stock are exposure to rising UK motor rates and the potential to pay out excess capital return above guidance.
The new target, meanwhile, incorporates a better earnings outlook, a lower cost of equity and a terminal growth rate of 2.5%.
Nomura kept RSA Insurance at ‘buy’ and lifted the price target to 510p from 495p, saying the group could over-deliver on restructuring, which could lead to earnings per share upgrades of 20% in 2018.
The bank maintained its ‘neutral’ stance and 400p price target on Direct Line Group.
It said that while DLG provides the highest yield, there is more upside to the base case for Admiral on special dividends, while Admiral is also relatively more exposed to UK motor.
Meanwhile, RSA offers more upside potential on restructuring than DLG.
On Admiral, it said: “The stock de-rated in the wake of reserve strengthening due to bodily injury claims in 2011 (which ultimately proved to be too conservative) and then additional regulatory headwinds and UK motor rate declines.”