MGIC Investment Corp. (MTG)

[tommiegun53]

MTG WAS $9.03 FOR 20 DAYS OF 30 DAYS, MGIC CAN FORCE CONVERSION

Douglas Harter, Analyst at Crédit Suisse explains as follows :

Revisiting Share Repurchase Assumptions
NOVEMBER 28, 2016

"Raising Estimates and Target Price
MTG has traded above the $9.03 early conversion price for its 2020 convertibles for the past 7 days; should the price remain above that level for 13 of the next 23 days, there will be a mandatory conversion of the convertible note. This would not impact EPS as the shares are already included in the diluted share count.

While there is no impact to earnings from the conversion of the 2020s, we do expect MTG to attempt to offset the 30 million extra shares through buyback over time. Even if the early conversion isn't triggered this time around, we continue to expect MTG to pursue these share repurchase options.

We are increasing our 2017-18 EPS estimates to reflect our updated share repurchase outlook, and are raising our target price to $10 (from $8). We see three paths to be able to fund the buyback."