UPDATE: Compass Point Upgrades Annaly Capital Management to Buy on Capital Allocation
Compass Point raised its rating on Annaly Capital Management (NYSE: NLY) with a Buy rating and a $17 price target.
Compass Point noted, "Three things have led us to change our opinion on the shares of NLY. First, yesterday's $1.5B share repurchase program is a smart allocation of capital given current reinvestment yields and should provide a floor for the share price and improves the risk versus return outlook. Second, while prepayment rates will increase in October and remain high throughout year end, QE3 will remain a strong, if not somewhat artificial, bid for Agency MBS. This bid should support book value per share at NLY and other mortgage REITs. Third, the valuation works as NLY shares trade at 0.97x BVPS and a 12.7% current dividend yield, both low relative to historical trading multiples (especially given the shape of the yield curve and rate outlook)."
Annaly Capital Management closed at $15.72 on Tuesday.
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