Compass Point analyst Fred Small downgraded NMI Holdings Inc. to "neutral" from "buy," writing that there are "limited catalysts" to boost the company's valuation in the near term.
The analyst said the company was on track to hit a low double-digit return on equity by 2018. However, the company's continued "strong" insurance-in-force growth and "benign" credit trends appear to be priced into current earnings expectations, he said.
The analyst maintained the price target for the company at $13.00. He lowered the EPS estimate to 54 cents from 59 cents for 2017 and to $1.07 from $1.08 for 2018. He said he lowered the estimates due to higher loss ratio assumptions, higher interest expense and increased tax rates.