Market Overview

Lingering Effects Of Bankruptcy Makes Valuing Ambac Financial Shares Difficult

Share:
Lingering Effects Of Bankruptcy Makes Valuing Ambac Financial Shares Difficult

Shares of Ambac Financial Group, Inc. (NASDAQ: AMBC) plunged more than 17 percent after MKM Partners downgraded the stock to Sell from Neutral, citing difficulties in valuing the company.

“While the parent company came out of Chapter 11, its operating company remained in rehabilitation and accordingly there was no way for capital to leave the operating company to the parent, except for a small amount related to a tax tolling agreement,” analyst Harry Fong wrote in a note.

Recently, Ambac's Wisconsin regulator said, "[A]t the present time, absent further actions, AAC has insufficient capital to demonstrate that a “durable” exit can be achieved to the satisfaction of the Rehabilitator."

Analyst's Commentary, Price Target

Fong set a price target of $10 versus a fair value target of $27.

Fong said he continues to have “great difficulties” assessing an appropriate value for the company. Its trailing adjusted book value (ABV) is $32.12. The analyst said he valuing Ambac at a 70 percent discount to its trailing ABV or $10.

“For comparison, Syncora that recently came out of rehabilitation trades at about a 77 percent discount to its trailing adjusted book value. Valuing Ambac at a 77 percent discount to ABV yields a price of about $7.50,” Fong added.

At last check, shares of Ambac plunged 16 percent to $21.84.

Latest Ratings for AMBC

DateFirmActionFromTo
May 2017MKM PartnersUpgradesSellNeutral
Mar 2017BTIG ResearchUpgradesNeutralBuy
Dec 2016MKM PartnersDowngradesNeutralSell

View More Analyst Ratings for AMBC
View the Latest Analyst Ratings

 

Related Articles (AMBC)

View Comments and Join the Discussion!

Posted-In: Analyst Color News Short Ideas Downgrades Price Target Analyst Ratings Movers Trading Ideas Best of Benzinga

Latest Ratings

StockFirmActionPT
HALStephens & Co.Upgrades
SANHSBCUpgrades
DALArgus ResearchUpgrades48.0
CTSHWilliam BlairUpgrades
XELMorgan StanleyMaintains60.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com