UBS Raises Price Target on Assured Guaranty (AGO) to $40; Reiterates Buy
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UBS reiterated a Buy rating on Assured Guaranty (NYSE: AGO), and raised the price target to $40.00 (from $33.00), as outlook continues to improve. UBS is currently forecasting $405MM of share buybacks for AGO in 2017. This does not assume a special dividend from its insurance subsidiary which would result in higher share buyback in 2016.
Analyst Brian Meredith commented, "First, we have not factored in any earnings or book value accretion from the announced acquisition of MBIA U.K. Net insured par at MBIA U.K. is approximately $13bb with approximately $500mm of GAAP book value. The transaction is expected to close in early January 2017 and we believe will be accretive to both earnings and book value. Second, the recent U.S. election outcome could lead to increased infrastructure spending and higher interest rates. We have already seen spreads widen on municipal bonds, which could help insured penetration."
Shares of Assured Guaranty closed at $35.26 yesterday.
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