Enact's (ACT) revenue and earnings potential is expected to remain limited by current interest rates and affordability challenges, similar to other mono-line mortgage insurers, RBC Capital Markets said in a note Thursday.

Still, the report said the business could deliver strong profitability on embedded home price appreciation, low in-force note rates and prudent reserving and reinsurance purchases.

Enact carries the most unique structure in the US Mortgage Insurance space, with Genworth (GNW) owning about 80% of the business, the report said.

The note said its ownership structure is unlikely to change in the near term, but Enact could allocate significant capital to share buybacks as growth remains challenging amid high profitability.

RBC started coverage at sector perform with $46 price target.

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