Can esure) ensure a positive reaction to next Tuesday’s half year results?
It’s been an awful 12 or so months for the insurance company. Having climbed above £3 in the middle of 2017, the stock has been on a slow and steady decline. Opening 2018 at £2.46, it had hit £2.08 by mid-April, only to rebound back to £2.43 towards the end of May.
Yet that peak didn’t last long, with the firm tumbling to a 17 month nadir of £1.90 on July 26th. esure Group PLC has bounced from those lows, if not by much, and now sits at a current trading price of £2.06 (Spreadex, 10/08/2018).
The company’s last update came at the start of May, with its first quarter blighted by the UK’s severe weather. esure stated that ‘a prolonged freeze event and significant disruption from The Beast from the East and Storm Emma’ resulted in £8 million in claims costs in Home, £6 million ahead of what was forecast.
Still, gross written premiums were up 18% for the 3 months ending 31st March to £221.2 million, with the 21.1% surge in the Motor division to £201.4 million compensating for the 6.2% decline in Home to £19.8 million. Interim CEO Darren Ogden went on to claim that ‘after adjusting for the exceptional weather costs’ the company was ‘well placed to deliver profitable growth in 2018’.
As for Tuesday’s half year update, investors will be looking for a continuation of that muscular Motor growth, alongside a recovery in the second quarter from its Home division. The state of its interim profits will also be of great interest, especially the size of those aforementioned ‘exceptional weather costs’.
esure Group PLC has a consensus rating of ‘Hold’ alongside an average target price of £2.74.
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