Radian Group - Wait Before You Buy This Mortgage Insurer

The U.S. housing markets are enjoying a healthy recovery as represented by the National Case Shiller Price index, which is at a level of 131.08, up from last year's level of 128.2. New homes and apartments are being constructed at the fastest rate since 2008. That's also the case with the newly requested building permits. While the U.S. housing markets are on their way to a rebound, the U.S. private mortgage insurers, particularly the big three, are facing difficulties, according to a report by Barron's. Shares of the companies plunged more than 10% the day the report was published.

In conclusion, despite better-than-expected third-quarter results and an improvement in the latest operating statistics, we believe Radian still has to go a long way before we recommend the stock to our investors. Therefore, we reiterate our neutral rating on the stock. Read more