UPDATE: Wunderlich Securities Upgrades American Capital Mortgage Investment Corp. to Buy, Reiterates $21.50 PT Following Solid 4Q13 EPS Report

In a report published Friday, Wunderlich Securities analyst Merrill Ross upgraded the rating on American Capital Mortgage Investment Corp. MTGE from Hold to Buy, and reiterated the $21.50 price target. In the report, Wunderlich Securities noted, “American Capital Mortgage (MTGE) reported core 4Q13 EPS of $0.69, beating our estimate and more than covering its dividend. BVPS declined, based on market valuations at year end, but has since rebounded. This is the same for most MBS investors; we record BVPS only four times a year, but market values change on a daily basis. We are upgrading the shares of MTGE from Hold to Buy because: the portfolio positioning can support the indicated dividend and provide upside; BVPS is likely restored today based on bond market trends; because MTGE is investing in servicing mortgages, which can optimize earnings in the future; and especially because the valuation is compelling. Our price target of $21.50 could be conservative, because it is based on trailing BVPS.” American Capital Mortgage Investment Corp. closed on Thursday at $19.16.