Direct Line PLC remained in favour at RBC Capital Markets although the broker did lower its price target for the online insurer.
“The UK Motor market remains structurally challenged with the turnaround point, when margins stabilise, perhaps being pushed out a bit further than some had hoped for” analyst at the broker wrote.
There are some encouraging signs with inflation levels appearing to have stabilised slightly, and written rates are in excess of inflation while also accelerating.
“It looks as though the market is headed in the right direction, but we are still a few more supportive data points away from being convinced that we've reached a turnaround point.”
RBC noted this will take time to earn through, but current valuation levels still suggest good value with an 11% forward dividend yield.
The broker lowered its price target to 260p but reiterated an outperform rating.
Estimates were cut for the next three years by 6%, 1% and 2% respectively primarily driven by weaker underwriting results in Motor.