Piper Jaffray Downgrades Ambac (ABK) to Neutral; $4.50 PT

Piper Jaffray downgrades Ambac Financial (NYSE: ABK) from Buy to Neutral and lowers its price target from $15 to $4.50, citing large HELOC and CES losses during the quarter.

The firm said that it is concerned with further residential mortgage backed securities (RMBS) losses and lowered its FY08 and FY09 earnings estimates on Ambac to reflect this assumption: from ($8.26) and $2.03 to ($10.15) and $1.66, respectively.

Piper Jaffray said that it was "caught off guard" with the rapid deterioration in Ambac's HELOC and CES segments.

Notably, Piper's $4.50 price target on Ambac represents a potential gain of 12.5% from its last trade at $4.00 in pre-market trading this morning.

Ambac Financial Group, Inc., through its subsidiaries, provides financial guarantee products and other financial services to clients in the public and private sectors worldwide. [BCS]

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