MGIC Investment Corp.’s stock tumbled 5.9% on Friday after an analyst with Macquarie Group Ltd. called on investors to sell the stock on the prospect that claims costs and legal expenses will drain assets, according to Bloomberg.
The valuation of MGIC is “out of whack,” given costs since Sept. 30, wrote Jasper Burch, who cut the stock to underperform from neutral. “We see continued earnings and book value pressure.”
He estimates the company will post an operating loss of $1.69 a share when it reports fourth-quarter results.
MGIC was the biggest decliner of the 10 Mortgage Industry Equity Composite stocks that finished in the red. For comparative purposes, the rally in the Dow Jones Industrial Average continued, with that index gaining 0.51% on the day.
The big MIEC gainer on the day was MGIC’s competitor in the private mortgage insurance business, the Radian Group, up 3.29% from
