Shares in Direct Line Group (LON:DLG) have jumped in London in afternoon trade as the company announced that its full-year profits will come in ahead of market expectations. The update comes ahead of the blue-chip insurer’s results on February 27.
As of 13:31 GMT, Direct Line’s share price had jumped 3.31 percent higher to 380.70p, outperforming the broader UK market, with the benchmark FTSE 100 index having slipped deep into the red and currently standing 0.92 percent lower at 7,104.49 points. The group’s shares have added about 3.5 percent to their value over the past year, as compared with a 1.70-percent dip in the Footsie.
Direct Line hikes forecasts
Direct Line announced in a statement today that it expects to report operating profit from ongoing operations of about £610 million and profit before tax of about £540 million, compared to last year’s £403.5 million and £353.0 million, respectively. The company explained that it had benefitted from good results in its Motor and Commercial divisions, as well as lower-than-expected weather claims.
“The combination of our operating performance and favourable claims result has delivered financial results ahead of market expectations,” Direct Line’s chief executive Paul Geddes commented in the statement. The FTSE 100 group further noted that it would ‘consider any return of capital,’ with a decision to be announced alongside its preliminary results.
Analysts on blue-chip group
Peel Hunt lifted its stance on Direct Line to ‘add’ this week, hiking its price target on the shares from 360p to 415p, while Barclays upgraded the stock to ‘overweight,’ raising its valuation from 384p to 413p. According to MarketBeat, the FTSE 100 insurer currently has a consensus ‘buy’ rating and an average price target of 414.23p.