Shares of MBIA were gaining 2.6% to $7.94 in morning trading.
MKM analysts believe the Puerto Rico Electric Power Authority and its bond insurers will soon come to an agreement in which MBIA and the other bond insurers will see minimal losses, if any.
"According to several press reports, the bond insurers have been negotiating to provide PREPA with a surety bond wrap to serve as a reserve fund in order to aid in a broader debt restructuring with PREPA's current creditors," MKM analysts wrote. "We expect the two sides will ultimately be able to come to a consensual resolution prior to PREPA's next scheduled debt service payment in December."
The analyst firm lowered its 2015 EPS estimates for MBIA to 50 cents a share from 51 cents a share despite the upgrade. MKM also lowered its 2016 EPS estimates for MBIA to 40 cents a share from 42 cents a share.
TheStreet Ratings team rates MBIA INC as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:
We rate MBIA INC (MBI) a SELL. This is driven by some concerns, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, generally high debt management risk, disappointing return on equity, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Insurance industry. The net income has significantly decreased by 46.7% when compared to the same quarter one year ago, falling from $120.00 million to $64.00 million.
- The debt-to-equity ratio is very high at 2.29 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Insurance industry and the overall market on the basis of return on equity, MBIA INC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, MBI has underperformed the S&P 500 Index, declining 20.72% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- MBIA INC's earnings per share declined by 20.0% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, MBIA INC increased its bottom line by earning $2.67 versus $1.10 in the prior year. For the next year, the market is expecting a contraction of 80.5% in earnings ($0.52 versus $2.67).
- You can view the full analysis from the report here: MBI