Car insurance giant Admiral was under heavy selling pressure on Monday afternoon after Credit Suisse downgraded its rating on the shares, saying that there isn't much upside left in the stock.

"Despite reporting a solid headline result and outlining multiple areas where buffers have been built to support future results, weaker-than-expected vehicle count growth, heightened pressure on industry pricing and larger-than-expected international losses have prompted us to lower earnings forecasts by 4-7% for FY12-14e," the broker said.

As such, Credit Suisse has reduced its target price from 1,300p to 1,250p and, with the new target being just 5% above the current share price (1,186p as of Friday's close), has lowered its rating from 'outperform' to 'neutral'.

The broker notes that Admiral has been among the best performers in the insurance sector so far this year, up 41.5% on the back of improving confidence about bodily injury claims inflation.

"While this is undoubtedly positive, [trading] at 11.3x 2013e [earnings], we are not convinced that there is further scope for material upside risk to the share price. In particular, we believe near term sentiment is likely to be constrained by weaker data-points on vehicle count growth and industry pricing trends, while there is also potential for uncertainty to increase as various regulatory bodies conduct reviews of the industry."

Credit Suisse thinks it is unlikely that Admiral can return to its "pre-bodily injury" price-to-earnings multiple of over 15 times in the near term "with growth running out of steam (for now) and the industry delicately poised".

By 14:44, the share price was down 3.20% at 1,148p.

BC

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