On Tuesday, Roth/MKM maintained a Neutral rating on Ambac Financial (NYSE: NYSE:AMBC) but reduced the price target to $13.00 from the previous $16.00. This adjustment follows Ambac's report of adjusted earnings per share (EPS) of $0.18 for the second quarter of 2024, which was in line with market expectations and only slightly below Roth/MKM's estimate of $0.19.
Ambac's earnings for the quarter were close to projections, but the attention was drawn to the company's strategic moves. The firm announced the sale of its legacy financial guarantee business and the completion of acquiring a 60% stake in Beat Capital Partners. These developments marked significant shifts in Ambac's business operations.
The decision to lower the price target to $13 reflects a valuation multiple of approximately 0.4 times Ambac's trailing adjusted book value. This new target considers the recent changes in the company's business structure and assets.
Despite the earnings meeting the consensus estimate, the analyst from Roth/MKM chose to adjust the price target based on the latest corporate actions taken by Ambac. The sale of a major part of its business and the acquisition of a significant interest in another company are likely the driving factors behind this reassessment.
The revised price target and the maintained Neutral rating indicate a cautious outlook on Ambac's stock from Roth/MKM.
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