Berenberg lowers target price on Sabre

Analysts at Berenberg lowered their target price on insurance provider Sabre from 224.0p to 199.0p, stating that when "things do not add up" it's time to 'sell'.

Berenberg stated that since its downgrade of Sabre to 'sell', its peers had adjusted their numbers on the stock. However, the analysts said they "mark their homework as a C-" and implored them to "do better".

While the German bank noted that consensus had moved by about 15% for the next three years, it remains around 20% below consensus for 2022 and 2023 and said it also has concerns that Sabre's pricing discipline was "weakening" given the change in average premium per policy has consistently lagged management's 7.5-8% view of claims inflation since 2014.

Finally, Berenberg added that Sabre was beginning to enter "the world of the uncovered dividend" in 2021, which it said was "unusual" given it should have been one of the company's strongest years due to Covid-19.

"As a result, we estimate 2020 and 2021 will be the peak years for DPS and then the dividend is set to decline," said the analysts.

"For these reasons, we remain sell-rated and believe there is additional 10% downside to our new 199.0p price target."