Is it irrelevant, or will the Upgrade make the Direct Line share price more attractive?

• The chart shows Direct Line’s share price movements since early October.
• Trading in a 5 week range between 312p and 333p.
• Shares -19.9% from 2018 lows; +3.3% from 2018 highs; -16.9% year-to date
• Shore Capital upgraded Direct Line to Buy, and reiterated its 400p target.
• Consensus summary: 13 Buys, 7 Holds, 0 Sell; Average target: 391p (Source: Bloomberg).
• Current share price 316p (at time of writing).
• Will the shares turn back, or will the upgrade push the shares back towards 334p October highs?

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Trading Direct Line – An Example

Let’s say you think that Direct Line shares have upside potential as result of this broker upgrade. You decide to buy exposure to £10,000 worth of Direct Line using a CFD, at the current price of 316p. To do this, you need £2,000.

For the purpose of this example, let’s assume the Direct Line share price rises to 334p October highs (+5.7%). Your profit would be £570 from your initial investment of £2,000.

Conversely, let’s assume you open the above position, and place a stop-loss at 3% from the current price. Direct Line shares break below November lows, they fall 3% and hit your stop-loss. Your loss would be £300.

This is provided for information purposes only. It should not be taken as a recommendation.