LONDON (ShareCast) - (Sharecast News) - Berenberg has upgraded Sabre Insurance to 'hold' after the motor specialist secured a five-year deal with Freeway Insurance Services.
Sabre announced on Friday that it had entered into a deal with Freeway, a distributor of taxi insurance in the UK, to become the exclusive underwriter for policies issued by the company's managing general agent.

In a note published on Monday, Berenberg - which previously had a 'sell' rating on the stock - said "things were looking up" for Sabre.

It said: "This is the second deal that Sabre has announced since its third quarter trading update, with the first being its link up with motorcycle insurer MCE.

"The Freeway and MCE deals combined will raise Sabre's top line by about 20% in 2022, in addition to the pricing cycle in the UK motor appearing to be turning upwards.

"These three elements have materially changed the outlook for Sabre, and while there is some risk associated with the deals, with the 2022 combined ratio likely raising above 80%, outer-year performance looks stronger.

"We upgrade our rating to 'hold' and raise our price target to 231p."

Berenberg previously had a price target of 202p on the stock.

It concluded: "Things are looking up. There are questions outstanding on the existing book, although management has taken decisive action to alleviate pressures on the business. We welcome this change in strategy and although these new ventures will come with some unknown risks, the outlook for Sabre has materially improved."

As at 1150 GMT, shares in Sabre were largely unchanged at 225.5p.

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