Among the key news on UK stocks, Direct Line Insurance Group PLC’s (GB:DLG) gained over 3% on Wednesday after it announced a strategy shift by listing its flagship brand, Direct Line, on price comparison websites. This move aims to broaden the reach of its brands by offering customers options through multiple channels.
Direct Line’s CEO, Adam Winslow, highlighted that listing Direct Line on price comparison websites will disrupt the motor insurance market, as 90% of customers use these websites for shopping.
Direct Line Insurance Group is among the leading insurance companies in the UK, owning brands like Churchill, Green Flag, Darwin, etc.
More Details About DLG’s Update
Apart from motor, the company aims to strengthen its Home, Commercial Direct, and Rescue segments to drive more profitability. However, it plans to exit Pet, Travel, and other personal line businesses to focus on its core areas. Additionally, the company reaffirmed its goal of achieving at least £100 million in cost savings by 2025.
In terms of shareholder returns, the company has committed to distributing approximately 60% of post-tax operating profit as regular dividends. Moreover, any additional capital returns will be evaluated annually alongside its full-year results.
Analysts’ Reactions
Analyst Ivan Bokhmat from Barclays expressed slight concerns, believing that the company might face challenges in maintaining its competitive advantage in the price comparison market. However, he noted that the move could potentially help reduce the company’s marketing costs and streamline its operations.
Meanwhile, Citi analysts expect a decrease in the company’s income as a result of exiting certain business segments.
Are Direct Line Shares a Good Buy?
Year-to-date, DLG has gained almost 8% in trading. In February, the stock surged by over 20% in a day after the company rejected the acquisition offer from Ageas, citing it as unattractive.
According to TipRanks consensus, DLG stock has received a Moderate Buy rating, backed by three Buy and three Hold recommendations. The Direct Line share price target is 228.3p, which is 13.5% above the current trading level.
