First American Is Hot

First American Financial Corp.’s stock rose 7.6% Wednesday amid increasing optimism that the earnings of the Santa Ana company, the largest U.S. title insurer, will be bolstered by the surging housing market.

“People are realizing that they’re making a lot more money than was expected,” said Charles Gunther, an analyst at the San Francisco-based brokerage Van Kasper & Co. The California real estate market accounts for 40% of First American’s title business. Title insurers write policies protecting homeowners from competing ownership claims on their properties.

The New York Stock Exchange said it asked the company for information on “corporate developments” that might be causing the advance in its stock. Shares of the company have more than doubled in price this year. On Wednesday, the stock rose $7.75 to $109.50 a share. Earlier in the session it hit a 52-week high of $112.50. Volume totaled 156,000 shares, twice the daily average for the last three months.

Gunther, who rates the stock a “strong buy,” increased his 1998 earnings forecast Monday to $7.33 a share, more than twice last year’s $3.64. He previously had estimated per-share earnings of $6.22 for the year.