Barclays downgrades IWG and Direct Line Insurance

Analysts at Barclays downgraded insurance firm IWG to 'equal weight' on Friday.

Barclays stated nothing "material" has changed strategically, but said consensus seems optimistic on cash conversion in IWG's company-owned business and highlighted that it sees risk that the firm's city locations do not fully recover to pre-Covid profitability due to structural changes in the office rental market.

"We cannot yet gain conviction that the earlier-stage digital and capital-light businesses can be a sufficient offset, and we downgrade to EW with a 170p PT (-11%), implying 37x/20x FY23e/24e EV/NOPAT," said Barclays/

The bank also downgraded Direct Line Insurance to 'underweight', noting that it believes the group's recent CEO change, strongly restricted solvency capital and "stiff competition" in UK personal lines all increased the likelihood of a capital raise.

However, Barclays also noted that operating performance was likely to remain soft in 1H23.

Reporting by Iain Gilbert at Sharecast.com