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Investing.com - Keefe, Bruyette & Woods raised its price target on MGIC Investment (NYSE:MTG) to $27.00 from $26.00 on Monday, while maintaining a Market Perform rating on the stock.
The research firm cited expectations of higher relative returns on equity (ROEs) for the mortgage insurer in a "higher for longer" interest rate environment. The company already demonstrates strong profitability with a return on equity of 15%.
KBW increased its price target multiple for MGIC Investment to 1.25x from 1.2x, reflecting the company’s improved capital efficiency compared to its peers.
The analyst noted that MGIC’s capital return strategy is contributing to this enhanced efficiency relative to competitors in the sector.
Despite the price target increase, Keefe, Bruyette & Woods maintained its neutral Market Perform rating on MGIC Investment shares.
In other recent news, MGIC Investment Corp reported its Q1 2025 earnings, showing an impressive performance with earnings per share (EPS) of $0.75, surpassing the forecasted $0.69. Although the company’s revenue slightly missed expectations at $306.23 million compared to a forecast of $306.52 million, the overall financial results were strong. The company maintained a solid position in the private mortgage insurance sector, supported by robust underwriting practices and risk management. MGIC’s net income reached $186 million, with an annualized return on equity of 14.3%. The firm’s operating expenses decreased to $53 million, down from $61 million the previous year, showcasing effective cost management. Analysts from Barclays (LON:BARC) and UBS discussed MGIC’s strategy during the earnings call, focusing on market share and potential impacts of economic conditions. MGIC continues to emphasize share repurchases as its primary method of capital return, with a recent authorization of an additional $750 million repurchase program. The company’s leadership remains confident in its strategic direction amidst evolving market conditions.
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