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KBW: MBIA shares inexpensive but near-term outperformance unlikely

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KBW: MBIA shares inexpensive but near-term outperformance unlikely

Keefe Bruyette & Woods analyst Bose George has initiated coverage of MBIA Inc. with a "market perform" rating, writing that the company's shares remain inexpensive but near-term outperformance is unlikely due to exposure to Puerto Rico.

MBIA's shares will continue to be impacted by Puerto Rico events as the company holds $3.4 billion of gross par and $8.2 billion in gross debt service related to the island, George wrote in a Feb. 4 note. However, he expects the company to be able to adequately cover Puerto Rico-related losses in the near term as principal and interest payments are only payable when due.

Additionally, George wrote that he sees limited near-term liquidity risk for MBIA as its current liquidity combined with as-of-right dividends from its main subsidiary, National Public Finance Guarantee Corp., give it cushion for losses.

George's price target for the company is $7. His operating EPS estimates call for a loss of $2.03 for 2017, a loss of $1.41 for 2018 and a loss of $2.22 for 2019.