Morgan Stanley Initiates WD At Overweight, $16 PT

Morgan Stanley initiates coverage of Walker & Dunlop, Inc. (NYSE: WD) with an Overweight rating and a $16 price target.

“We expect WD to grow originations at a 15% CAGR in 2010-14, maintaining a recently ramped 5% share of multifamily originations in a robust refinancing cycle ($131B is up for refi 2011-14, and front-end loaded with 2011 up 19% y/y and 2012 up 44% y/y),” Morgan Stanley writes.

“WD's IPO positions it to attract top originators, offer bridge loans to compete with large peers, or potentially acquire a correspondent, driving operating leverage. GSE reform is a headline risk, as WD sells two-thirds of its originations to the GSEs.”

Walker & Dunlop currently trades at $11.10.