Analyst Mihir Bhatia of Bank of America Securities maintained a Buy rating on Essent Group, retaining the price target of $66.00.
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Mihir Bhatia has given his Buy rating due to a combination of factors that highlight Essent Group’s strategic positioning and financial robustness. The company’s management has demonstrated a commitment to conservative capital management while ensuring solid returns and engaging in significant share buybacks at current valuations. This approach is supported by the transformation of the mortgage insurance industry over the past 15 years, which has improved credit quality and introduced a more dynamic business model through reinsurance and advanced pricing engines.
Furthermore, Essent Group is focused on enhancing its book value per share, despite the current limitations in the mortgage market. The company is leveraging its pricing engine, EssentEdge, to optimize returns and manage expenses effectively. Additionally, the market’s valuation of Essent Group does not fully recognize the earnings potential of its existing insurance portfolio, which is expected to generate substantial future earnings. The company’s strategic buybacks and disciplined approach in a relatively stable credit environment further reinforce the Buy rating.