NEW YORK (AP) — Shares of Radian Group Inc. rose Wednesday after a Susquehanna analyst upgraded the mortgage insurer's stock, saying its is poised to double as the housing market continues to improve.
THE SPARK: Jack Micenko raised his rating for Radian to "Positive" from "Neutral" with a $14 price target.
THE BIG PICTURE: The fortunes of mortgage insurers like Radian are tied closely to those of the housing market. An uptick in home sales means more business for the companies that back the mortgages used to buy them.
THE ANALYSIS: Micenko said that while Radian's shares have risen significantly from their 52-week lows, those gains are more about the company's improvements to its own finances than the health of markets it operates in.
He predicted that Radian's first-quarter results will at least approach profitability, which set against the backdrop of the housing recovery, should perk investor interest.
"If you missed the homebuilder stock run of 2012, we believe Radian is the next name with about 100 percent upside from current levels as purchase demand and home prices continue to improve at a modest clip," Micenko wrote in a note to investors.
THE SHARES: Up 31 cents, or 4 percent, to $7.90 in heavy afternoon trading. Earlier, they set a new 52-week high at $8.28, marking their highest point since January 2011. The stock has more than doubled in the past year but is still well off its February 2007 peak of $67.35, reached prior to the collapse of the U.S. housing market.