NEW YORK (TheStreet) -- Shares of Radian Group (RDN) - Get Report are up 0.55% to $16.32 in afternoon trading Wednesday after MKM Partners initiated coverage with a "buy" rating and a $22 price target. 

"In our view, Radian's earnings and returns will improve over the next several years as its legacy portfolio becomes a smaller portion of its overall portfolio of risk, " MKM analysts said. 

Radian has emerged as the largest Purchasing Managers Index (PMI) company in the industry by insurance in force following the credit crisis, the firm said, adding that the company has grown nicely in recent years while residential mortgage underwriting standards improved dramatically. 

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Analysts expect Radian's manageable PMIERs shortfall following the sale of its financial guaranty to comply with the Federal Housing Finance Agency's new rules well before these capital requirements become effective.  

"Since the credit crisis, the private mortgage insurance industry has become very attractive.  Credit quality remains strong, home values are still appreciating, premium rates are nearly double what they were pre-crisis and required capital is up only 30% to 40%, but likely to move a bit higher following PMIERs implementation," MKM Partners said, adding that the 2006-2008 loans are quickly becoming a much smaller part of the story.  

With this knowledge, if investors are looking to gain exposure to a financials firm with improving return potential, analysts encourage them to consider Radian shares. 

Radian Group is a credit enhancement company with a primary strategic focus on domestic residential mortgage insurance on first-lien mortgage loans (first-liens).

Separately, TheStreet Ratings team rates RADIAN GROUP INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate RADIAN GROUP INC (RDN) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, compelling growth in net income, impressive record of earnings per share growth and expanding profit margins. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

• The revenue growth came in higher than the industry average of 6.1%. Since the same quarter one year prior, revenues slightly increased by 8.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
• The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Thrifts & Mortgage Finance industry and the overall market, RADIAN GROUP INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
• The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Thrifts & Mortgage Finance industry. The net income increased by 1077.7% when compared to the same quarter one year prior, rising from $36.37 million to $428.34 million.
• RADIAN GROUP INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, RADIAN GROUP INC turned its bottom line around by earning $5.37 versus -$1.37 in the prior year. For the next year, the market is expecting a contraction of 72.6% in earnings ($1.47 versus $5.37).
• The gross profit margin for RADIAN GROUP INC is currently lower than what is desirable, coming in at 32.29%. Regardless of RDN's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, RDN's net profit margin of 145.17% significantly outperformed against the industry.
• You can view the full analysis from the report here: RDN Ratings Report