NEW YORK (TheStreet) -- Assured Guaranty (AGO) shares appear set for a "flurry of trading" as key credit ratings and legal decisions affecting the company look to be imminent, according to one analyst who is bullish on the company's stock.
"We believe both these events could cause the stock to move by 5%-10%, or more, in either direction, depending on the outcomes," wrote MKM Partners analyst Harry Fong in a research note published Monday. In keeping with his "Buy" rating, Fong is betting on a positive outcome from the two events.
One of Fong's expected catalysts is a decision from Moody's Investors Service, which has yet to follow up after it put Assured Guaranty on review for a possible downgrade March 20. Moody's has delayed its decision on two separate occasions, leading Fong to speculate that a positive surprise may be in the cards.
"Given the lengthy delays, we wonder if there have been significant behind-the-scenes negotiations designed to allow Assured to maintain a rating in the Aa category," Fong wrote in a report published Monday. Assured Guaranty currently has a Aa3 rating from Moody's, and Fong notes he had initially expected Moody's to lower it at least one notch, which would have brought it to single-A status.Fong also expects a favorable ruling for Assured Guaranty from Federal Judge Jed Rakoff in a pending lawsuit against Flagstar Bancorp over residential mortgage-backed securities that Flagstar sold and Assured agreed to insure based on what Assured argues was misleading information provided by Flagstar. " The important thing to [Rakoff] and to Assured Guaranty was whether the insurer took on more risk than it was led to believe," Fong writes, arguing the insurer was indeed misled. -- Written by Dan Freed in New York. Follow @dan_freed
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
24/7 market commentary from Jim Cramer and 20+ veteran Wall Street gurus. Get access to the latest trading ideas on stocks, options, and ETFs as well as a real-time forum to see the pros exchanging their investment ideas.
- Jim Cramer + 20 Wall Street pros
- Intraday commentary & news
- Real-time trading forum
- Actionable trade ideas
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV