RBC Capital downgrades Direct Line, says risk/reward more balanced
Direct Line Insurance Group
163.30p
17:15 05/11/24
-0.37%
-0.60p
RBC Capital Markets downgraded Direct Line on Friday to ‘sector perform’ from ‘outperform’ and slashed the price target to 190p from 260p, as it said the risk/reward of the shares is now more balanced.
FTSE 250
20,370.04
16:59 05/11/24
n/a
n/a
FTSE 350
4,502.88
16:59 05/11/24
n/a
n/a
FTSE All-Share
4,460.27
16:39 05/11/24
n/a
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Insurance (non-life)
3,566.58
16:59 05/11/24
0.22%
8.00
"We think DLG can restore its solvency towards the 160% level organically in 2023, predicated on a dividend rebasing that we think is the most economically sensible option," RBC said.
"While this challenges DLG's dividend appeal, it averts the need of a capital raise, at a time when access to market funding is costly, if not undesirable to shareholders."
RBC said the new CEO appointment could catalyse a recovery, albeit it might not be immediate and timelines are not clear.
At 0930 GMT, the shares were down 1.4% at 182.49p.