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Radian Group (NYSE:RDN) stock climbed 1.3% in Thursday midday trading, against a backdrop of red in the financial sector, after BofA Securities analyst Mihir Bhatia upgraded the mortgage insurer to Buy from Neutral.
“At the current valuation, we think that RDN shares could offer an attractive 34% total return to our price objective from a combination of price appreciation and dividends,” Bhatia wrote in a note to clients
Even with higher interest rates and lower home price appreciation, BofA continues to have a favorable outlook for housing credit as post-financial crisis regulation has “materially improved industry credit standards.”
Higher unemployment rates could lead to slightly higher loan defaults, Bhatia said, but strong home price appreciation in recent years should help reduce loss severities.
Bhatia’s Buy rating contrasts with the SA Quant rating of Hold, but aligns with the average Wall Street rating of Buy.
Earlier in December, BTIG analyst Eric Hagen downgraded Radian (RDN) and two other mortgage-related stocks to Neutral as higher interest rates increase the cost of financing sources.
SA contributor Mike Zaccardi likes Radian (RDN) as it’s among the cheapest stocks in the mortgage insurer group despite its strong earnings
