UPDATE: Bank of America Merrill Lynch Upgrades Invesco Mortgage Capital to Buy, Raises PT

In a report published Wednesday, Bank of America Merrill Lynch upgraded its rating on Invesco Mortgage Capital

from Neutral to Buy, and raised its price target from $21.25 to $23.00. BofA Merrill Lynch noted, “We are upgrading Invesco Mortgage Capital (IVR) to a Buy rating from Neutral and our income rating goes from “8” to “7” to reflect the dividend durability and capital appreciation potential of the company's pivot toward more credit sensitive investments. IVR announced a $300M equity issuance last night, which it expects to invest in both Agency and credit assets. The rotation supports IVR's $2.60 annual dividend, based on our estimates, and could provide upside to NAV, as US housing values slowly recover. We think the market will reward the forecast dividend stability with a modest premium valuation leading to one of the higher total returns (18%) in our mortgage REIT coverage.” Invesco Mortgage Capital closed on Tuesday at $21.77.