BOSTON -- Shares of Genworth Financial Inc. fell after a Credit Suisse analyst on Tuesday downgraded the stock, saying a recent rally ignores the risks that Genworth faces in its life insurance businesses, particularly in long-term care insurance.
THE SPARK: Credit Suisse'sThomas Gallagher cut his rating to "Underperform" from "Neutral".
THE BIG PICTURE: Shares of the insurance and wealth management services provider have surged more than 100 percent since early August and more than 50 percent since mid-November. The gain was fueled in part by optimism that the recovery in the U.S. housing market will improve performance at Genworth's mortgage insurance unit.
THE ANALYSIS: Gallagher said in a note to clients that "there has been disproportionately too much emphasis placed on the housing market recovery and the impact it will have on U.S. mortgage insurance, and not enough focus on the life insurance entities."
He noted that Genworth has one of the largest businesses in long-term care insurance, and the company faces risks in that segment as policyholders live longer, potentially hurting profitability.
SHARE ACTION: Shares of the Richmond, Va., company fell 31 cents, or about 3.7 percent, to $8.02 in morning trading. The stock has traded between $4.06 and $9.68 over the past 12 months.