Direct Line share price up as Morgan Stanley stays bullish on insurer

Analysts lift valuation amid focus on growing own-brand policies

Direct Line share price up as Morgan Stanley stays bullish on insurer

Shares in Direct Line Group (LON:DLG) closed higher yesterday, as analysts at Morgan Stanley reiterated their bullish stance on the blue-chip insurer. The broker has pointed to the group’s focus on growing its own-brand policies.

Direct Line’s share price rose yesterday, adding 0.65 percent to close at 388.80p, outperforming the broader UK market, with the benchmark FTSE 100 index ending the session 0.61 percent lower at 7,387.87 points. The group’s shares have added more than four percent to their value over the past year, and are up by some five percent in the year-to-date.

Morgan Stanley reaffirmed Direct Line as an ‘overweight’ yesterday, while lifting its price target on the shares from 423.00p to 451.00p. Sharecast quoted the analysts as explaining that they were pleased by the group’s focus on growing its own-brand policies and expected that the company’s business mix would lead to higher margins and customer retention rates.

The broker further cited enhanced safety features on vehicles as a factor likely decrease long-term risks to providers in the UK insurance industry. Morgan Stanley also noted Direct Line’s receptiveness to a comprehensive overhaul of its IT architecture as a significant differentiator over time, with few European insurance companies having actively sought to rebuild the legacy IT systems they operate on, which could position the FTSE 100 group ahead of the curve.

The comments come after Direct Line recently reiterated its financial targets for the year, aiming to deliver combined operating ratio between 93 percent and 95 percent, and investment income yield at 2.4 percent.

Credit Suisse also boosted its price target on Direct Line yesterday, from 410p to 450p, maintaining its ‘outperform’ stance on the company. According to MarketBeat, the blue-chip insurer currently has a consensus ‘hold’ rating and an average price target of 389.08p. 

As of 08:05 BST, Friday, 18 August, Direct Line Insurance Group PLC share price is 386.60p.

Top Equities Brokers

0 Brokers added for comparison:
Clear all