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Admiral Group is trading at £14.57, and the stock is up 2.8% since the company reported a 7% rise in full-year profit for 2013 in March, with results exceeding analysts’ estimates.
The company’s US business Elephant Auto increased its vehicle base by 34% which helped offset the 9% drop in premiums from the UK operation. The chief financial officer, Kevin Chidwick expects the UK market to remain subdued for ‘at least six months if not another year’.
In July, Admiral Group warned that its premiums were being squeezed, and announced an unexpected bond issuance in which £200 million was raised to beef up its cash balance and comply with new EU regulations.
Equity analysts are a touch on the bearish side; out of the 21 ratings, four are buys, nine are holds and eight are sells.
The stock has dropped 7.2% since July’s statement, and traders viewed it as a thinly-veiled profit warning. A similar announcement on Wednesday could drive the stock to £14.06, and the shares may encounter resistance at £15.16.