Wunderlich Maintains Hold on Capstead Mortgage (CMO)
Wunderlich is out with its report on Capstead Mortgage (NYSE: CMO), maintaining Hold and a $12 price target.
In a note to clients, Wunderlich writes, "Capstead Mortgage (CMO) reported 4Q10 EPS of $0.40, against our estimate of $0.39 (revised in December when the company declared a $0.39/share dividend). The key changes that prompted portfolio stabilization was the end of the effects of GSE buyouts on prepayment speeds, and reinvestment of principal paydowns received at par on its guaranteed RMBS. The company repositioned a portion of its hedges, and will benefit from the rolldown of financing costs, which include hedge expense. We note the improved run rate, which appears sustainable, but we maintain our Hold rating and our $12 price target based on an estimated ROE in the 13% to 15% range for 2011."
Shares of CMO closed yesterday at $12.95.
