UPDATE: J.P. Morgan Upgrades Apollo Residential Mortgage to Overweight, Reiterates $22 PT on More Balanced Opportunity Set

In a report published Tuesday, J.P. Morgan analyst Richard Shane upgraded the rating on Apollo Residential Mortgage

from Neutral to Overweight, and reiterated the $22.00 price target. In the report, Shane noted, “AMTG is a MREIT that invests in both Agency and non-Agency RMBS. The company allocates ~60% of equity capital to the Agency asset class. Agency and non-Agency RMBS are typically counter-cyclical investments, with Agency paper typically outperforming during periods of economic stress (flight to quality) and non-Agency RMBS assets outperforming during periods of economic growth. Considering the sell-off in Agency MBS YTD and the appreciation of non-agencies YTD, we believe the relative opportunity set may be more balanced going forward. We view the company as a well managed MREIT that will become more attractive as it builds solid performance history.” Apollo Residential Mortgage closed on Monday at $22.00.