RBC Capital downgrades Direct Line, says risk/reward more balanced
Direct Line Insurance Group
252.40p
17:15 23/12/24
3.78%
9.20p
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
20,419.09
17:09 23/12/24
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FTSE 350
4,471.06
17:09 23/12/24
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FTSE All-Share
4,428.73
16:44 23/12/24
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Insurance (non-life)
3,934.56
17:09 23/12/24
1.24%
48.37
"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.