UPDATE: Compass Point Upgrades CYS Investments to Buy on Favorable Interest Rates, Lower Share Valuation

In a report published Tuesday, Compass Point analyst Jason Stewart upgraded the rating on CYS Investments CYS from Neutral to Buy, and reiterated the $13.50 price target. In the report, Stewart noted, “Weaker global growth trends, which has resulted in a more favorable interest rate environment, combined with a lower valuation of shares and reset investor expectations has caused us to change our outlook. In 1Q13, generic Agency MBS CPRs stabilized as driving mortgage rates increased. As such, we expect NIM to be moving through trough levels and CYS' current dividend run rate of $0.32 per share to be sustainable. However, moderate industry capacity increases and generally low rates will keep CPRs from falling materially. Continued Fed buying will likely keep Agency MBS spreads in check and absolute yields relatively low and thus are not likely to support meaningful ROE expansion.” CYS Investments closed on Monday at $11.94.