UPDATE: Compass Point Initiates Coverage on Essent Group Ltd. with Neutral Rating, $24 PT as Growth Outlook Remains Bright, but Valuation is Reflective

In a report published Friday, Compass Point analyst Jason Stewart initiated coverage on

with a Neutral rating and $24.00 price target. In the report, Compass Point noted, “We initiate coverage of Essent Group Ltd

with a Neutral rating and a $24 price target. Our outlook for the PMI sector is favorable as low interest rates, reasonable affordability levels, improving home prices, positive long term demographic trends and easier mortgage credit conditions support housing fundamentals. ESNT is a relatively new entrant in the private mortgage insurance (PMI) sector, has a pristine balance sheet almost all of RIF in post 2010 vintage risk, and the potential for operating leverage to drive significant forward EPS upside. However, ESNT's valuation largely reflects many of these factors. Our $24 price target represents a multiple of 2.5x YE14 BVPS and 13.4x our 2015 EPS estimate, which is 37% ahead of the street consensus.” Essent Group Ltd. closed on Thursday at $21.94.