UPDATE: Compass Point Downgrades Two Harbors Investment to Neutral Ahead of Common Equity Offering

Compass Point analyst Jason Stewart published a report on Two Harbors Investment

that downgraded the company from Buy to Neutral and raised the price target to $14.75. In the report, Compass Point wrote, "While the near term outlook for levered MBS investing remains stable and the company has made significant progress in their business diversification efforts, the current share price reflects this optimism and further multiple expansion would require a more dramatic re-deployment of capital. In addition to the Silver Bay transaction, investing in asset classes such as whole loans, excess MSRs as well as other new business initiatives will continue to differentiate TWO from other mortgage REITs and justify a premium valuation. The recent capital raise, a steeper yield curve and a diversified investment approach should allow TWO to effectively navigate many of the headwinds that will face MBS investors." Two Harbors Investment closed Monday at $13.74.