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Sandler O'Neill bullish on Heritage Insurance after taking stock of Hermine-related damages

Sandler O'Neill & Partners LP analyst John Barnidge hasupgraded Heritage InsuranceHoldings Inc. to "buy" from "hold" afteraccounting for the financial impact of Hurricane Hermine that hit Florida inearly September.

Barnidge said damages stemming from Hermine are "relativelycontained" and pegged the insurer's share of losses at $10 million. Theanalyst cut his 2016 EPS estimate to $1.80 from $2.00 and 2017 EPS estimate to$2.55 from $2.75.

The analyst said a significant portion of the activehurricane season this year is already over and he does not believe Florida willwitness another hurricane in the third quarter. Besides, the insurer now writesapproximately half of its new premiums outside of Florida, he added.

Barnidge said the stock has fallen more than its Floridapeers in the property insurance space, which he said is not warranted, becauseothers are facing the same issues.

The analyst raised his price target on the stock to $16 from$15.