Sterne Agee Raises Estimates on Annaly Capital Management (NLY)

Sterne Agee is out with a brief analyst note this morning, where it reiterates its Neutral rating on shares of Annaly Capital Management NLY; it did not provide a price target for the stock. The Sterne Agee analysts said, “We were surprised by Annaly’s higher-than-expected dividend of $0.68. Accordingly we are raising our June quarter EPS estimate from $0.54 to $0.60, our FY10 estimate from $2.50 to $2.60, and our FY11 estimate from $2.63 to $2.70.” They added, “Our preliminary analysis suggests that the increased earnings are likely due to 1) lower than forecast amortization expense and 2) lower swap costs in concert with the recent rally in rates markets.” Annaly’s principal business objective is to generate net income for distribution to investors from the spread between the interest income on its mortgage-backed securities and the cost of borrowing to finance its acquisition. The company also receives dividends from its 8+% stake in Chimera, a public mortgage REIT, and from its wholly owned subsidiaries, 2 investment advisors and a broker/dealer. Learn how to find the best stocks to trade each day in our 70 page E-Book and 90 minute online video for free.