Stephens Upgrades First American Financial (FAF) to Overweight

Stephens analyst John Campbell upgraded First American Financial (NYSE: FAF) from Equal Weight to Overweight with a price target of $72.00.

The analyst comments "We are upgrading FAF to OW from EW and moving our PT to $72 (based on 11x forward EPS) from $65 on higher estimates. We believe that the combination of better housing, >$300 mil. in under-appreciated 2023 earnings support (nearly half of 2022's pretax income) and enhanced capital returns more than offset the growing fears around a commercial market fallout (we model a -20% YOY decline in '23 and -8% YOY in '24). We see FAF (and the title stocks, in general) as one of the best/cleanest ways to play housing given: 1) an attractive valuation (FAF at 8.8x forward EPS/3.6% div. yield), 2) a dynamic model that has counter-cyclical offsets (ex. inv. income should help FAF actually grow margins in another down rev. year) and 3) less noise as it plays in an oligopolistic market where market share and pricing are stable (unlike many of its non-title resi brethren)."

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 $57.54 yesterday.

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