MTG - MGIC Investment: Strong Company At A Fair Price (Rating Downgrade)

2024-02-05 11:30:55 ET

Summary

• MGIC Investment Corporation's shares have performed well in the past year, rising by nearly 39% due to the resilience of the housing market.
• The company's earnings beat expectations, but new policies and net premiums earned have declined due to the rise in interest rates.
• The credit quality of borrowers remains strong, but there has been a steady increase in consumers' debt-to-income ratio. However, delinquencies are low and home prices have stayed elevated, reducing potential losses on policies.

Shares of MGIC Investment Corporation ( MTG ) have been a strong performer over the past year, rising by nearly 39%, as the housing market has proven to be resilient to significantly higher interest rates. Shares have also returned about 14% since I recommended buying the stock in October . With rises sharing near my $20-22 price target, now is an opportune time to revisit MTG, and I am downgrading it to a hold....

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