RBC Capital Markets analyst Scott Heleniak downgraded MGIC Investment Corp (NYSE:MTG) to Sector Perform from Outperform at a price target of $17.
The analyst believes MTG shares have neared fair value in the current macro risk/reward environment and expects increasing challenges in the housing market and macro environment.
Heleniak expects the company to witness difficult Y/Y EPS comparisons for Q2 2023 through Q1 2024 owing to high year-ago reserve releases.
Nevertheless, the analyst notes the company has reduced its debt-to-capital ratio to 11.9% from 21% in 2020 and significantly improved capital efficiency and risk management.
Heleniak expects strong earnings & ROEs in H2 2023 and 2024 for the company and significant shareholder returns via buybacks and dividends.
The analyst estimates EPS of $2.10 in 2023 and $2.20 in 2024.
Price Action: MTG shares are trading lower by 1.69% at $15.44 on the last check Thursday.
