UPDATE: MLV & Co Downgrades New York Mortgage Trust Despite Solid 4Q13

In a report published Thursday, MLV & Co analyst Richard Eckert downgraded the rating on

from Buy to Hold, but raised the price target from $7.50 to $7.65. In the report, MLV & Co noted, “Make no mistake about it, this is a valuation call. NYMT shares now trade at 126% of book value (BV) and at a current yield of 13.6% (Exhibit 4). Although the latter metric is still over 200 bp above the median peer (Exhibit 4), that peer has also seen a run-up in valuation this quarter. SFR mREITs as a group (Exhibit 5) are trading at a yield just a little more than 800 bp above that of a 10-yr UST note, which is about 400 bp tighter than the historical norm (Exhibit 5). And even as valuations in the sector have surged, challenges have multiplied. "The direction of long-term interest rates is still uncertain, most mREITs have de-leveraged and built large hedge books, and spreads have narrowed considerably on credit-sensitive assets. There are also whispers of shortages in rate-sensitive assets. GSE issuances are down and demand for agency hybrid ARMS and 15-yr FRMs is heated. NYMT entered 2013 with a market cap of just over $300mm; it is approaching the end of 1Q14 with a market cap of over $600mm. As fundamentally solid as we consider the company to be, its stock no longer appears to be flying under the radar.” New York Mortgage Trust closed on Wednesday at $7.97.