Update: Wunderlich Securities Raises PT On Amtrust Financial Services Following Earnings

AmTrust Financial Services AFSI reported operating results for 4Q and year-end 2010 above Wunderlich's expectations. Operating EPS for 4Q10 were $0.57 versus Wunderlich's estimate of $0.54 and a year ago of $0.52. The consensus was in line with Wunderlich's estimate. The company continues to be opportunistic exploiting niche property/casualty inefficiencies. The result was 34% revenue growth in 4Q10, driven by higher premiums in Specialty Risk & Extended Warranty and fee income growth. ROAE for 4Q10 was 19.2%, well above AFSI's competitors. Wunderlich is raising its price target from $20 to $23 to reflect its confidence in the company's underlying fundamentals. The 2011 EPS estimate of $2.45 is unchanged. Total revenues increased 34% in 4Q10 to $279.4 million from $208.0 million a year ago. Specialty Risk & Extended Warranty net written premiums increased 48% from organic growth and improving economies in the U.S. and Europe. In addition, fee income was strong at $22.6 million, in line with 3Q10 reflecting acquisitions. Wunderlich believes AFSI will continue to deliver top-line outperformance from attractive acquisitions and high-return fee and service lines of business. Wunderlich has a Buy rating on AFSI AFSI is trading higher at $19.41