Direct Line share price outperforms as Deutsche Bank says ‘buy’

Analysts point to attractive valuation and receding risks

Direct Line share price outperforms as Deutsche Bank says ‘buy’

Shares in Direct Line Group (LON:DLG) have climbed higher in today’s session, as Deutsche Bank turned bullish on the blue-chip insurer. WebFG News reports that the analysts have pointed to an attractive valuation, an expected inflection in motor pricing, medium-term optionality and receding risks.

As of 14:37 BST, Direct Line’s share price had added 1.08 percent to 326.50p, outperforming the benchmark FTSE 100 index which currently stands 0.38 percent in the red at 7,205.95 points. The group’s shares have given up a little over seven percent of their value over the past year, as compared with about a four-percent dip in the Footsie.

Deutsche Bank bullish on Direct Line

Deutsche Bank lifted its stance on Direct Line from ‘hold’ to ‘buy’ today, and hiked its price target on the shares from 380p to 390p. WebFG News quoted the analysts as saying that with regards to valuation, there was no doubt that the FTSE 100 company  provided an attractive dividend yield for the next few years.

The broker further reckons that following the company’s analyst day in Bristol last week, it was clear that there was ‘significant’ potential to improve productivity from the new IT platform. The insurer is further rolling out an alternative pricing model, increasing its quote footprint.

Deutsche Bank added that having spoken to the company, it remains comfortable that a recent surge in subsidence claims seen elsewhere in the industry should be manageable for Direct Line.

Other analysts on blue-chip insurer

Peel Hunt reaffirmed Direct Line as a ‘buy’ last week, without specifying a price target on the shares. According to MarketBeat, the blue-chip insurer currently has a consensus ‘hold’ rating and an average price target of 403.25p.

As of 15:00 BST, Tuesday, 09 October, Direct Line Insurance Group PLC share price is 327.06p.

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