UPDATE: Citigroup Reiterates Neutral Rating, Lowers PT on Annaly Capital Management

In a report published Wednesday, Citigroup reiterated its Neutral rating on Annaly Capital Management NLY, but lowered its price target from $17.00 to $15.00. Citigroup noted, “We rate the shares of NLY Neutral with a $15 target price. NLY owns a $130 billion high quality portfolio of Fannie/Freddie Mac mortgage-backed securities financed with short-term repurchase debt. In response to the economic recession, the Fed reduced their target rate to 0% on December 16, 2008 and rates have remained there since then. We believe NLY will generate a solid relative yield though we see downside to the dividend. We also acknowledge elevated prepayment risk and tighter reinvestment spreads. And gain on sale is a greater portion of earnings. We don't see much upside to the stock beyond the dividend. Longer term, the key risk for NLY is if the Fed raises short-term rates.” Annaly Capital Management closed on Tuesday at $15.20.