MBIA, Inc. (MBI)

MBIA (MBI - Analyst Report) reported net income of $3.34 per share in 1Q09 compared to a net loss of $12.92 per share in 1Q08. However, results benefited primarily from the mark-to-market adjustments in the insured portfolio, which is not expected to continue. We have yet to see any real positive fundamental improvement, and don't expect any to occur in the near term.

Rating issuers further downgraded MBIA and its subsidiaries, and a group of financial institutions are challenging the company's recent restructuring efforts. All these points complicate and add to the uncertainties.

The deteriorating insured portfolio and turbulent financial market only magnifies the threat. We maintain our Sell recommendation for MBIA, seeing no signs of relief over the medium term.