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Merrill Ups Admiral's Target Price

Jan 9, 2007

By Sion Barry

Investment bank Merrill Lynch has raised its share price objective for motor insurance group Admiral of Cardiff. Yesterday it upgraded it to 1240p. Admiral's share price closed at 1088p. The City institution said Admiral's subsidiary venture, which provides online price comparisons on car insurance, had the potential to increase fourfold to pounds 58m by 2010.

Merrill Lynch said, 'A more detailed analysis of Confused, a visit of the Spanish operations [Balumba] and a transition to a discounted cash-flow valuation have led us to raise our share price objective by 24% to 1240p.

'Our earnings for 2008-09 rise by 7% and 10% respectively. We expect Admiral to deliver annual earning per share growth of 21% during 2007-11.

'Few companies in our sector can boast growth at this rate and for such an extended period.

'A closer look at Confused suggests we had previously not allowed for the considerable increase in customers shopping around following a pricing upturn - during the recent soft market their number declined by more than a quarter.

'We expect that the reverse will occur once rates start to rise.' is also based in Cardiff.

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