MTG - MGIC Investment loses bull rating at RBC as stock nears fair value

2023-07-06 12:31:18 ET

MGIC Investment ( NYSE: MTG ) stock dipped 2.8% in Thursday afternoon trading after RBC Capital Markets downgraded the stock to Sector Perform from Outperform on the basis that it "has neared fair value in the current macro risk/reward environment."

Although analyst Scott Heleniak expects the company to post strong earnings in the back half of the year and in 2024, along with significant capital return through buybacks and dividends, the tough housing backdrop (i.e. high interest rates and home affordability challenges) could hinder NIW growth.

"We continue to expect MGIC's in-force portfolio to generate strong earnings, but view the home-purchase market slowdown as limiting to earnings growth in the near-term," he wrote in a note.

The Sector Perform rating aligns with the SA Quant system rating of Hold and diverges from the average sell-side analyst rating of Buy.

More on MGIC Investment and its growth prospects:

• MGIC's Recent Rally Reduces Upside, But The Stock Remains A 'Buy'
• Buy MGIC: 15% Cash Returns To Investors And Growing

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