Macquarie downgrades Helia, says conditions 'as good as they get'
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The news: Macquarie has downgraded Helia Group, saying the mortgage insurance provider's current conditions are "as good as they get" and its seeing a number of risks to the company's current valuation.
The numbers: Macquarie downgraded Helia from 'neutral' to 'underperform' but kept its target price of $4.20. Helia shares last closed at $5.62, having advanced nearly 60% over the last 12 months.
The context: Macquarie analysts said that Helia has been a big beneficiary of favourable macroeconomic conditions, with low unemployment and strong property prices supporting low claims and capital generation.
However, the analysts said tailwinds appear "well and truly priced in", but Helia's share price does not reflect potential risks around a normalisation in claims.
Meanwhile, they flagged risks around Helia's lenders mortgage insurance contract with Commonwealth Bank. The lender may adjust the terms for increased self-insurance, adjust pricing, or lose the contract altogether, the analysts said.
The source: Macquarie research
