UPDATE: Wunderlich Securities Upgrades AG Mortgage Investment Trust as Capital Reallocation Should Drive Value Creation

In a report published Friday, Wunderlich Securities analyst Merrill Ross upgraded the rating on AG Mortgage Investment Trust MITT from Hold to Buy, and raised the price target from $18.50 to $19.00. In the report, Wunderlich Securities noted, “We are upgrading the shares of AG Mortgage Investment Trust (MITT) to Buy from Hold, and increasing our target price to $19, which is a 2% discount to forward estimated BVPS of $19.37/sh. We think that MITT is well on its way to constructing a portfolio of commercial and non-agency mortgage assets that can produce higher returns with less leverage. "These asset classes are not as sensitive to the purchasing patterns of a monetary authority (i.e., the FOMC is buying Treasurys and agency MBS), and we believe that, with prudent underwriting, credit risk can be contained. Though we estimate 1Q14 EPS will be below the $0.60/sh indicated dividend, the company has $1.61 in earned, but undistributed, taxable EPS to cover the shortfall.” AG Mortgage Investment Trust closed on Thursday at $17.94.