UPDATE: Compass Point Initiates Coverage on NMI as Top Pick in Sector

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

with a Buy rating and $17.50 price target. In the report, Compass Point noted, “We initiate coverage of NMI Holdings

with a Buy rating and a $17.50 price target. Our outlook for the private mortgage insurance (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. NMI is a new entrant in the PMI sector, has a pristine balance sheet, a management team with experience building the business from scratch and a differentiated product in a largely commoditized sector. NMI shares trade at a discount to the group due to a higher degree of operating risk. However, we believe this is an opportunity for investors as the discount will compress through the ramp period as the business model is executed and the stock will ultimately be valued on run rate EPS, which we expect to be achieved in 1H16. NMI is our top pick in the PMI sector.” NMI closed on Thursday at $12.37.