Earnings Preview: Ambac Financial

Ambac Financial Group (ABK) is expected to report Q2 earnings before market open Wednesday, Aug. 6, with a conference call scheduled for 8:30 am ET.

Guidance

Analysts are looking for EPS of (65c) on revenue of $446.1M. The consensus range for EPS is ($1.17) to (21c), according to First Call. Only one analyst has posted a revenue estimate for the company.

Analyst Views

Ambac recently agreed to pay Citigroup (C) $850M to settle a potential lawsuit by the investment bank related to high-risk derivatives insured by Ambac. Michael Callen, the bond insurer's CEO, said the settlement "eliminates uncertainty with respect to future losses related to this transaction." On July 7, Callen said that Ambac had "ample liquidity to manage (its) commitments going forward." The company added that actions by the ratings agencies in June increased its collateral posting requirements by $506M, while causing investment agreement terminations of $270M. In recent weeks, two ratings agencies issued statements about Ambac.

On June 19, Moody's downgraded Ambac to Aa3 from Aaa. The firm wrote that the downgrade reflected "the company's significantly constrained new business prospects, its impaired financial flexibility and increased expected and stress loss projections among its mortgage-related risk exposures relative to previous estimates." Later in June, Fitch withdrew all of its outstanding ratings on Ambac, citing the company's decision to cease providing non-public information to Fitch and to cease communicating with the ratings agency's analysts.

Comments

[gjvoor1:]

Watching the up volume the last few days and the gains in the stock price short term bode well for an upside bounce. If you want odds a little better than Vegas and the chance for a 50% bounce take a shot!!!

2008 Aug 05 03:36 PM

[Ishortyou:]

Greedy crooks in Banks and Broker firms wrapped subprime, credit cards, bad loans, junk, etc. into structured finance vehicles i.e.: CDO-ABS-MBS-SIVs, they misled the market and bond insurers into these fraud and now everyone is paying the price with losses now the misleds have to clear up their books from that toxic waste! One strategy would be to SELL CDS on this toxic waste to other investors or PEERs in the business at attractive prices, this way they will raise capital and delever their books from this toxic waste. Rating agencies need to reinstate bond insurers triple A ratings once their books are cleared from toxic waste. AMBAC and MBIA are going in the right direction so it is just a matter of time before the get sound book of business again. Rating agencies will have to reinstate their tirple A ratings.

2008 Aug 05 06:26 PM

[william:]

the cheapest stock other than abk- I think moves high as a relief from earnings fright
check out awrcf.ob-- asian infrastructure play rev 510 million and net of .35 , book value around $10+( land and building real value not included), cash on hand $3.75/sh,only 13.8 million shares outstanding and michael dell from DELL own 20%-psr=.10, 60% below stated bk, pe based upon 07 = 10X nasdaq or other major exchange listing shortly according to management- read press
all for $4.00 cheapest stock in the world awrcf.ob

2008 Aug 05 10:31 PM