Updated from 2:52 p.m. ET.
NEW YORK ( TheStreet) -- MBIA (MBI - Get Report) bulls continue to recommend the shares after they got a much anticipated pop last week when the monoline bond insurer settled litigation with Bank of America (BAC - Get Report) and Societe Generale, but it's hard to see what will drive the shares higher in the near term.
MBIA shares gained more than 50% at one point on May 6 when the company announced it would receive $1.6 billion from Bank of America, and that the bank would drop a legal challenge to a crucial MBIA restructuring. They added slightly to those gains May 8 once MBIA announced a settlement with Societe Generale in which MBIA will pay the French bank an undisclosed sum.
BTIG analyst Mark Palmer reiterated his buy rating and $22 price target in a report published Thursday, a price he got by calculating 0.85% of the adjusted book value of National Public Finance, MBIA's municipal finance unit. That unit is not regularly writing new insurance, however, as its relatively low rating and a low interest rate environment have made the economics of doing so unattractive. Assuming that changes, analysts believe the company will be worth far more.
MBIA took a step closer toward reestablishing National's business when it received an upgrade to its credit rating from Standard & Poor's. "Our positive view of MBIA was always predicated on the view that National Public Finance would one day be unencumbered to its sister company. We now believe we will see this day soon," wrote MKM Partners analyst Harry Fong in a May 6 report. On May 9, Fong upped his price target on MBIA to $20 from $18, according to Bloomberg data. That said, Fong wrote in the same May 6 report that it would take "some time," for MBIA to monetize the value of National Public Finance. Weighing down National Public Finance has been MBIA's structured finance unit, MBIA Insurance. MBIA Insurance guaranteed mortgage backed securities, which played a central role in the 2008 housing bust. BTIG's Palmer assigns no value to that unit, because much of its value is still dependent on outstanding litigation involving ResCap, the bankrupt mortgage unit of Ally Financial and Credit Suisse (CS), among other parties.