FBR Capital Markets Wednesday said it initiated coverage of insurance information services provider Stewart Information Services Corp. (STC) with a "Market Perform" rating and a price target of $12.
Analyst Steve Stelmach said, 'While we feel comfortable that loss rates are nearing a more normal level, until the threat of incremental reserve adjustments is taken off of the table and cost-reduction initiatives show signs of success, we will remain neutral on shares of STC.''
The brokerage expects the company to benefit from a lower claims rate, as independent agencies start seeing results from their performance improvement programs. Additionally, FBR believes that pricing trends and increased operational efficiency should help Stewart return to profitability.
FBR also noted that the company is taking steps to increase revenue per employee and cut employee costs. However, the analyst does not see a meaningful revenue improvement either at the company or throughout the industry, until home prices stabilize and mortgage originations improve.
The brokerage's price target of $12 is 26 times its 2011 earnings estimate.
STC closed Tuesday's regular trade at $11.02, up from the previous close of $10.89, on 98,600 shares.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.