Buyback Could be on the Table for Meadowbrook Insurance (MIG) After Waiver On Credit Covenants - Compass Point

August 26, 2013 8:37 AM EDT Send to a Friend
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Price: $5.85 -0.68%

Rating Summary:
    5 Buy, 3 Hold, 0 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 13 | Down: 18 | New: 41
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Compass Point analyst Ken Billingsley reiterated a Buy rating and $8 price target on Meadowbrook Insurance (NYSE: MIG) after the company received waivers on its credit covenants. A stock buyback could now be on the table.

"The company has received a waiver from the lending group under its bank credit facility on certain covenant defaults that occurred following the recent goodwill impairment charge," Billingsley notes. "With out the goodwill charge, MIG would have been in compliance with all covenants. The company is negotiating permanent adjustments to its covenants to account for the non-cash charge to book value. The waiver is effective until September 20, 2013 an includes an authorization for the company to pay its scheduled common stock dividend on Monday, August 26, 2013. We believe the company will be successful in amending its covenants and will be able to continue to pay dividends and repurchase shares. We believe the company will be more open to repurchasing shares before year-end if they continue to trade at a discount to tangible book value given the company is unlikely to be upgraded by A.M. Best in the near future."

For an analyst ratings summary and ratings history on Meadowbrook Insurance click here. For more ratings news on Meadowbrook Insurance click here.

Shares of Meadowbrook Insurance closed at $6.04 yesterday.


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