FBR Capital Markets (FBR), Arlington, Va., is projecting Radian Group, Philadelphia, will return to profitability in 2010.

The company provided an earnings estimate of $0.25 per share for next year. This comes on top of reducing its loss estimate for this year from $1.40 per share down to $1.25 per share. The analysis assumes that Radian will have net premiums earned in 2010 of $1.0 billion, compared with a downward revised $877 million for this year.

However, the report from Steve Stelmach and Amy DeBone also noted that Radian Group has $350 million of debt coming due in 2010. Additionally, the holding company has a tax sharing payment to its subsidiary of $138 million in 2009 and a projected $300 million payment in 2010. But in terms of cash to make these payments, the company has $472 million total, consisting of $367 million in cash at the holding company and the potential for $105 million in tax refunds coming.

"Should Radian not be able to make these payments, the stock would prove to be overvalued. However, capital support at the holding company (either through government capital infusions or private equity) would help mitigate this risk," FBR said.

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