Gilford Securities Reiterates Buy Rating on HCII

Gilford Securities is out with a research report this morning, where it reiterates its Buy rating on Homeowners Choice HCII; it has a $10.50 price target on the stock. The GS analysts cited the company's recently reported Q2 earnings results, which were below estimates (on an adjusted basis) due to flat premiums versus last year as the company is driving towards a more conservative underwriting profile. The company said that book value increased to $7.74 per share, from $7.48 the quarter prior. Book value per shares has now been increasing for the past 10 quarters and GS estimates that by the end of 2011 it will be roughly $9.00 per share. As for valuation, the analysts remarked, “With $1.06 per share in earnings on the horizon in 2011 and a book value approaching $9, we could easily continue to support a 10X P/E when EPS are growing in excess of 50% and Book Value is growing by over 10% per year.”