Fidelity National Shares Drop After Downgrade

NEW YORK (AP) — Fidelity National Financial Inc. shares dropped Tuesday as an RBC Capital Markets analyst cut his rating on the stock due to its recent recovery.

Shares tumbled $2.32, or 10.2 percent, to $20.28 in midday trading. Shares have gained 27 percent for the year, and are up significantly from a November 2008 low of $6.66.

In a note to clients Tuesday, analyst Mark Dwelle lowered his rating on the stock to "Sector Perform" from "Outperform," saying the title insurance provider has benefited greatly from the government's stimulus measures, which have produced strong mortgage origination volumes and refinance activity.

Title insurance is part of the closing costs people pay when buying or refinancing a home. The insurance protects against potential losses if there's a problem with the property's ownership records.

"We believe that Fidelity National Financial shares now fairly reflect the increasing likelihood that real estate transaction volumes will return to near 2007 levels," Dwelle wrote.

Dwelle raised his 2009 operating earnings estimate to $1.40 per share from $1.25 per share, noting that the company's fundamentals remain solid. Dwelle also raised his target price on the stock by $1 to $21. Analysts, on average, forecast a full-year profit of $1.53 per share, according to a poll by Thomson Reuters.

Earlier Tuesday, the Jacksonville, Fla.-based company announced plans for a public offering of 13.3 million common shares. Proceeds will be used to repay debt and for other general corporate purposes.