UPDATE: Bank of America Initiates Coverage on Armour Residential

According to a research report published earlier today, Bank of America has initiated Armour Residential REIT, Inc.

with a Buy rating and $7 PT. In the report, Bank of America explained, “ARR is a mortgage REIT that invests exclusively in residential agency MBS. We forecast ARR will generate a 17% dividend yield in 2012. Valuation should rise to around 1.05x BV, in our view, suggesting modest upside potential. Investors could earn a 22% total return over the next 12 months, 17% from dividends plus 5% from share price improvement, based on our dividend forecast and price objective. The primary risks to our forecast include: changes in interest rates, rising prepayments, execution risk, liquidity risk and adverse changes in regulatory policies.” Armour Residential closed yesterday at $6.63.