UPDATE: J.P. Morgan Downgrades Annaly Capital Management to Neutral, Reiterates $17 PT

In a report published Monday, J.P. Morgan & Co. downgraded its rating on Annaly Capital Management

from Overweight to Neutral, and reiterated its $17.00 price target. J.P. Morgan noted, “We are reducing our rating on NLY to Neutral from Overweight as the risk/reward profile has become more balanced. The shift is partially a function of the stock trading above our price target but also of recently announced government intervention and movements in the MBS and Treasury markets. On August 9th, we defended NLY in the face of downgrades and price weakness. In our view enough factors have shifted to change our investment case. Key changes include: (1) the stock now trades at a premium to our price target; (2) QE3 may further erode margins; and (3) the ECB's OMT program reduces Euro risk, which may diminish the value of NLY as a portfolio hedge.” Annaly Capital Management closed on Friday at $17.38.