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Highlights
Helia Group Ltd (ASX:HLI), a key player in the Australian lenders mortgage insurance (LMI) market, is facing tepid sentiment from the analyst community, with the latest broker updates reflecting a cautious outlook despite a steady operational performance in the March quarter. The company currently carries a consensus “Sell” recommendation from three brokers, with an aveage 30.63% downside from the current market price of AUD 5.14.
Analyst Downgrades and Target Revisions
Recent analyst actions suggest mounting concerns about Helia’s near-term outlook:
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Jefferies reiterated a "Underperform" rating on 2 May 2025, setting a price target of AUD 3.60, which is 30.50% below the current share price.
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Macquarie Research echoed this pessimism with a "Underperform" rating on 5 May 2025 and an even more bearish target of AUD 3.25, implying a 37.26% downside.
- Mean has set price target of AUD 3.59 on 6 June 2025, reflecting a drop of 30.63%
These target revisions reflect a trend of steadily declining broker expectations over the past few months.
Mixed First Quarter Trading Update
In its 1Q25 update lodged with APRA, Helia reported growth in Gross Written Premiums (GWP) year-on-year, supported by higher new housing loan activity with loan-to-value ratios (LVR) above 80%, and a gain in market share. However, this was offset by ongoing headwinds from the Home Guarantee Scheme (HGS) and a rise in lender self-insurance, which continues to depress the LMI market.
Insurance revenue dipped slightly compared to the previous corresponding period, as recent lower GWP levels weighed on earnings. Nevertheless, incurred claims were negative, offering a substantial boost from changes to liabilities for previous claims due to favourable experience adjustments and revised assumptions.
Helia’s investment revenue remained flat, showing a steady net running yield and modest capital appreciation, while its regulatory capital base, decreased from end-2024 levels due to the final dividend payout.
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