LONDON (ShareCast) - (Sharecast News) - Deutsche Bank downgraded Direct Line to 'hold' from 'buy' on Friday, cutting the price target to 340p from 350p as it said the first half was strong but catalysts for further re-rating "remain elusive".
The bank said Direct Line's first-half results showed higher-than-expected reserve releases and signs of stabilising motor insurance prices, which together have helped to improve confidence around future earnings estimates.

"Despite this, after the modest subsequent rally in the shares, we believe the evidence the market needs to re-rate the shares further is either still unclear or at least six to 12 months away," DB said.

It said the target price cut reflects the above.

"Though this does still leave upside potential in the shares, we see similar or better value elsewhere in the UK insurance sector. And with further positive catalysts over the next six months likely to remain elusive, we downgrade our recommendation to hold."

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