Zacks Investment Research downgraded shares of Genworth Financial Inc. (GNW) from NEUTRAL to UNDERPERFORM on May 28, 2013, with a target price of $9.50.
We are downgrading Genworth to Underperform from Neutral. The company, in relation with the sale of its wealth management business, incurred a goodwill impairment and other loss, and expects to incur more losses upon closing of the transaction. First-quarter operating earnings surpassed the Zacks Consensus Estimate as well as the year-ago number. Top line, however, declined primarily due to lower net investment income, lower insurance and investment product fees and other as well as net investment losses. To better focus on generating capital, increasing the financial strength and flexibility of the company as well as simply the business model, Genworth decided to divest the wealth management business. With $500 million in 2014 debt maturities intended for redemption later this year, it aims a leverage of 25% for 2013 with a medium-term goal of 20% to 22%. However, the IPO of the Australian Mortgage insurance is further postponed to the fourth quarter of 2013 or later.
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