Genworth Shares Surged: What You Need to Know
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of insurer Genworth Financial (NYS: GNW) were rocketing higher today, gaining as much as 16% in intraday trading after a Citigroup (NYS: C) analyst put a "buy" rating on the company's shares.
So what: According to Bloomberg, Citigroup's Colin Devine had a "sell" rating on Genworth shares between August of 2009 and earlier this month. Now he's gone the full 180 and slapped a "buy" on the stock. Why? The simple answer is that shares are cheap.
Specifically, Devine thinks that the market has overblown the possibility that Genworth will go belly up. The U.S. mortgage market that Genworth insures is far from healthy -- further losses are likely ahead and new business won't exactly be booming. But with the stock badly beaten down, Devine thinks the opportunity outweighs the risk.
Now what: As an owner of Genworth stock myself, I'm certainly happy about what the stock's doing today. However, it's important to keep in mind that this doesn't change the fundamental picture at Genworth -- it's just one particular view on that fundamental picture. While Devine's bullish call might be a good reason to give the company a second look, investors will want to make sure they have their own buying thesis before joining the crowd today in the buying frenzy.
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