UPDATE: Compass Point Downgrades Amtrust Financial Services on Lack of Upside

In a report published Tuesday, Compass Point analyst Ken Billingsley downgraded Amtrust Financial Services AFSI from Buy to Neutral, but raised the price target from $38.00 to $43.00.

In the report, Compass Point noted, “We are raising our price target to $43 from $38 and downgrading AFSI to Neutral from Buy. Our downgrade is based on the company not providing the necessary upside based on our updated price target which incorporates our year-end 2014E diluted book value and ROAE expectations. The company has returned 26% since our May 2, 2013 upgrade to Buy, while the S&P 500 has returned 6.1% over the same time period. Our updated $43 price target is based on a 2.0x P/B multiple to our 2014E diluted BVPS of $21.60 and an operating ROAE expectation of 18%. However, BVPS growth could be higher due to future realized gains and returns on the company's Life Settlement investments that are not included in our operating estimates.”

Amtrust Financial Services closed on Monday at $41.44.