NEW YORK (AP) -- Shares of Genworth Financial Inc. rose to their highest point in more than a year and a half Monday on predictions that a stronger housing market could lift shares of the mortgage backer and life insurer.
A story in Barron's published over the weekend forecast that Genworth shares could nearly double in the next year, thanks to increasing demand for mortgage insurance, higher premiums and sales of some of the company's businesses could help Genworth.
Even if shares doubled, they would still trade below levels from before the recession began in December 2007. In the five years through December 2012, shares lost 70 percent of their value. They traded above $25 in late 2007, dropped to near $1 during the depths of the recession in 2009, and closed last year at $7.51.
The Richmond, Va., company named a new CEO late last year, Thomas McInerney, a former executive with ING. Barron's says he is helping change the company's operations for the better. The company announced a reorganization in January that it said would reduce financial risks at its mortgage insurance business. Analysts polled by FactSet expect that earnings per share, excluding one-time items, will grow 54 percent this year to $1.25.
Shares have gained 31 percent in 2013, and added 70 cents, or 7.1 percent, to $10.54 in midday trading Monday. They peaked earlier in the day at $10.74, the highest price since June 2011.
Genworth's stock has risen lately along with shares of many other companies connected to the housing market, such as homebuilders, home improvement retailers and several other mortgage insurers. That's because investors are betting that the housing rebound will continue. Low mortgage rates have lifted home sales and helped the housing market recover more than five years after the bubble burst. Home prices are rising, and the government is stepping up efforts to shrink its role in the mortgage finance system.
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