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Piper Jaffray Starts First American Financial (FAF) at Neutral

September 24, 2014 6:38 AM EDT
Get Alerts FAF Hot Sheet
Price: $60.63 +1.34%

Rating Summary:
    6 Buy, 4 Hold, 1 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 13 | Down: 10 | New: 11
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Piper Jaffray initiates coverage on First American Financial (NYSE: FAF) with a Neutral rating and a price target of $31.00.

Analyst Jason Deleeuw commented, "We are initiating on FAF with a Neutral rating and $31 price target, offering 12% potential upside. FAF’s shares are +1% YTD vs. the S&P 500/real estate services peer group at +10%/-6%. FAF has improved its operating efficiency and return profile despite a volatile mortgage origination market. We expect a tempered, but sustained home purchase volume recovery to drive EPS growth for FAF. However, we believe FAF’s ROE would need to move to 10%+ (vs. our ~9.0% range) for meaningful multiple expansion to drive the stock. Interest rate volatility and the resulting impact on home purchase activity is the key upside/downside risk, in our view. FAF is underlevered with a 15.6% debt-to-capital ratio, which provides some upside optionality for investors. FAF's shares carry an attractive 3.5% dividend yield. Our $31 price target is based on 14x our 2015
EPS estimate of $2.20."

For an analyst ratings summary and ratings history on First American Financial click here. For more ratings news on First American Financial click here.

Shares of First American Financial closed at $27.33 yesterday.



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