(HTH) Hilltop Holdings Incorporated – Bull of the Day

We are upgrading our recommendation on Hilltop Holdings Inc. (HTH) to Outperform based on its sound capital position along with a risk-free balance sheet, which also paved way for resumption of share buybacks, assisting shareholders’ confidence in the stock.

The company broke even in the third quarter but surpassed the Zacks Consensus Estimate of a loss and beat the year-ago results. The stability was driven by a higher-than-expected top line that benefited from improved premiums, investment income and net realized gains. However, expenses escalated on higher loss adjusted and underwriting expenses that even deteriorated the combined ratio and resulted in operating cash outflow.

Overall, Hilltop should continue to tread ahead with its strategic approach in order to capitalize on the opportunities that the markets provide on stabilization. Our six-month price target is $10.00 per share, reflecting about 0.8x our book value estimate of $12.34 per share. This is consistent with our Outperform recommendation.

HILLTOP HLDGS (HTH): Free Stock Analysis Report

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