Boenning & Scattergood analyst Robert Farnam has upgraded his rating on Atlas Financial Holdings Inc. to "outperform" from "neutral."

Farnam said Atlas' second-quarter results were positive and continued the momentum from a solid first quarter. The analyst said company executives have worked to rebuild investor trust after Atlas reported a significant reserve charge in the fourth quarter of 2017.

The risk of additional adverse reserve development remains in play, according to Farnam, and two good quarters following the large reserve charge does not mean the company's troubles are over. However, the analyst believes the stock's upside potential outweighs the downside risk.

Farnam has set a price target of $19 on Atlas. He raised his 2018 EPS estimate to $1.70 from $1.64, but maintained his 2019 EPS estimate of $1.75.