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3 Catalysts That Should Drive Invesco Mortgage Higher

3 Catalysts That Should Drive Invesco Mortgage Higher
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With the Risk Retention rule scheduled to be fully implemented in December 2016, Nomura’s Brock Vandervliet believes Invesco Mortgage Capital Inc (NYSE: IVR) is well positioned “as a CMBS issuer/sponsor and buyer of the equity tranche of third-party securitizations.”

Vandervliet upgraded the rating on the company from Neutral to Buy, while raising the price target from $14 to $16.

Three Catalysts

The analyst mentioned that there were three key catalysts to the current upgrade.

Firstly, Vandervliet believes the company now has a “leaner, higher return portfolio and lower opex following Q1.”

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Secondly, Invesco Mortgage witnessed a 3.5 percent book value decline in Q1, although management mentioned during their earnings call that “current book value recovered to a level consistent with year-end, or $17.14.”

Vandervliet believes this statement “puts a more positive spin on book value performance.”

Thirdly, the stock is about 80 percent of the most recent book value. Although Invesco Mortgage’s shares are no longer at their lows, they are the cheapest among the Hybrid REITs.

The EPS estimates for 2016 and 2017 have been raised from $1.60 to $1.68 and from $1.57 to $1.61, respectively.

Latest Ratings for IVR

Aug 2016BarclaysMaintainsEqual-Weight
Aug 2016Keefe Bruyette & WoodsMaintainsOutperform
May 2016NomuraUpgradesNeutralBuy

View More Analyst Ratings for IVR
View the Latest Analyst Ratings

Posted-In: Brock VandervlietAnalyst Color Long Ideas Upgrades Price Target Analyst Ratings Trading Ideas Real Estate Best of Benzinga


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