UPDATE: Wunderlich Securities Downgrades Arlington Asset Investment Corp. to Hold, Reiterates $27 PT on 1Q13 Results Miss

In a report published Wednesday, Wunderlich Securities analyst Merrill Ross downgraded the rating on Arlington Asset Investment Corp. AI from Buy to Hold, but reiterated the $27.00 price target. In the report, Ross noted, “Arlington Asset (AI) raised about $83 million in equity capital in an offering that priced on March 8, 2013, and 1Q13 results fell short of our estimate because of the timing of that raise. We are trimming our 2013E because of this shortfall. AI deployed the incremental capital into credit sensitive assets that benefit from the ongoing recovery in housing fundamentals, where it believes it can drive higher value creation over time. At current levels, the share price reflects our market-neutral year end estimated tangible BVPS of $27. When we trim estimates, we find it hard to increase our target price, so we are downgrading the shares of AI from Buy to Hold on valuation.” Arlington Asset Investment Corp. closed on Tuesday at $27.09.