Direct Line surges on Citi upgrade to ‘buy’
Direct Line surged on Wednesday after a double upgrade to ‘buy’ from ‘sell’ at Citi, which said that its industry channel checks give it more confidence on 2023 motor earnings.
Direct Line Insurance Group
03 May 2024 17:20:02
Source: Sharecast
Citi said the share price decline of around 40% year-to-date and 32% reduction in 2023 consensus earnings per share estimates mean the risk is now skewed to the upside.
"We believe there is sufficient solvency self-help to avoid an equity raise, that the motor pricing cycle has bottomed out, and DLG’s current circa 5.3x 2024E price-to-earnings represents an attractive entry point," it said.
More broadly, Citi said it believes consensus motor earnings have now sufficiently reset following FY22 results and that we are at the bottom of the motor pricing cycle.
At 1030 BST, the shares were up 6% at 152.15p.