UPDATE: Compass Point Upgrades Amtrust Financial Services As Motivated Sellers Help Drive Growth

In a report published Friday, Compass Point analyst Ken Billingsley upgraded the rating on

from Neutral to Buy, and raised the price target from $37.00 to $49.00. In the report, Compass Point noted, “Raising AFSI to a Buy from Neutral, and raising price target to $49 from $37. We are raising our rating on AFSI as we remain confident that management will continue to take advantage of opportunities to grow its business both organically and through acquisitions in both the fee based and underwriting segments. While some look at AFSI as a buyer of distressed assets, management qualifies this to say they are looking for motivated sellers in which there are not many bidders. AFSI has been very opportunistic, and a market in which premium rates may be peaking and economic growth remains anemic we would expect AFSI to continue to find attractive candidates. "The ACP Re merger with Tower Group International (TWGP - Neutral, $3 PT) is a prime example of AFSI taking advantages of opportunities. Fee income will grow in addition to new underwriting business following the proposed merger (expected to close in the summer of 2014). While AFSI shares trade at a premium to its peers, the company also generates a ROATE that far exceeds its peers. Estimated revenues for 2014 have a mix of fee income (46%), underwriting income (41%), and investment income (13%).” Amtrust Financial Services closed on Thursday at $41.91.