11:24 AM EDT, 09/18/2024 (MT Newswires) -- NMI Holdings ( NMIH ) is "well positioned" in the mortgage insurance market relative to its peers despite macroeconomic challenges, RBC Capital Markets said in a note Tuesday.

Nearly 50% of NMI's risk exposure involves borrowers with FICO scores above 760, and its default rate is under 1%, significantly better than peers who have default rates ranging between 1.5% and 2.5%, the investment firm said.

NMI's risk-based pricing model helps the company assess and price risk more effectively, ensuring robust protection and maintaining favorable underwriting results in a challenging housing market, RBC added.

NMI continues to be active in share buybacks and is expected to potentially introduce a quarterly dividend. The company's "healthy capital position" supports these capital return initiatives, the RBC analysts said.

In an upside scenario, NMI's stock price could reach $55, supported by earned premium growth of more than 10% and a 29.5% combined ratio. On the other hand, in a downside scenario, the price could fall to $32 if economic conditions worsen, leading to higher loss ratios and slower growth, RBC said.

RBC raised its rating to outperform from sector perform and boosted the price target to $48 from $40.

Price: 42.00, Change: +0.85, Percent Change: +2.07