Direct Line share price heads south as Deutsche Bank trims rating

Analysts argue group is now in ‘transition phase’

Direct Line share price heads south as Deutsche Bank trims rating

Shares in Direct Line Group (LON:DLG) have lost ground in London today after Deutsche Bank trimmed its rating on the blue-chip insurer, arguing that the company is now in a transition phase. The comments come after the FTSE 100 group recently updated investors on its full-year results.

As of 12:19 GMT, Direct Line’s share price had lost 2.19 percent to 384.60p, underperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.36 percent lower at 7,189.14 points. The group’s shares have added more than 10 percent to their value over the past year, as compared with about a 2.4-percent dip in the Footsie.

Deutsche Bank trims rating

Deutsche Bank lowered its stance on Direct Line from ‘buy’ to ‘hold’ today and trimmed its price target on the shares from 440p to 400p.

“Direct Line has consistently been our preferred UK motor player due to its attractive dividend yield which is underpinned by a conservative balance sheet,” the analysts said in a note, as quoted by Proactive Investors, adding, however, that they believed that the insurer was now entering a transitory phase where the capital management story is well understood by investors […], whereas the benefits of positive strategic initiatives may still be a couple of years away from showing tangible benefit”.

The comments came after the FTSE 100 group recently posted a rise in profits for the year ended December 31, 2017 and announced a special payout to shareholders. 

Other analysts on Direct Line

Investec meanwhile remains bullish on Direct Line, having reiterated its ‘buy’ rating on the shares yesterday, with a price target of 410p. According to MarketBeat, the blue-chip insurer currently has a consensus ‘hold’ rating and an average price target of 411.20p.

As of 12:40 GMT, Tuesday, 13 March, Direct Line Insurance Group PLC share price is 382.90p.

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