Piper Jaffray Downgrades American Physicians Capital (ACAP) to Neutral

January 5, 2009 11:16 AM EST

Piper Jaffray & Co. downgrades American Physicians Capital (Nasdaq: ACAP) from Buy to Neutral. Price target $48.

Piper analyst says, "With shares rising roughly 40.0% over the last month, shares of medical malpractice insurer American Physicians Capital now trade in the top decile of historic valuations. As such, we see little upside in the shares and lower our rating from Buy to Neutral on ACAP. At current prices, shares trade at 1.7x current book value, well ahead of our target valuation multiple of 1.5x, and offer little upside to our $48 price target...We continue to believe our multiple of 1.5x remains appropriate given current and projected returns on equity in the range of 15.0%-16.0%. Meanwhile, our view on the company's and industry fundamentals remains unchanged as low claim frequency continues to benefit underwriters through favorable reserve development."

American Physicians Capital, Inc., (APCapital) is an insurance holding company that writes medical professional liability insurance through its primary subsidiary American Physicians Assurance Corporation (American Physicians).

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