Morgan Stanley Sees Positive Catalysts Ahead For American Capital Agency Corp.

In a report published Thursday, Morgan Stanley analyst Cheryl M. Pate reiterated an Equal-Weight rating and $23.00 price target on American Capital Agency Corp. (NASDAQ: AGNC).

In the report, Morgan Stanley noted, “In the near term, AGNC remains comfortable with the agency space given strong technicals and low rate volatility. We expect leverage to remain around current levels and for AGNC to continue to take advantage of specialness in the TBA dollar roll market for some time. Over the next several years, AGNC will likely consider IO/MSR cash flow opportunities, highly-rated senior credits in non-agency, and more direct involvement in origination/sourcing of MSRs and MBS. Longer-term, AGNC is likely to employ higher leverage and pursue equity raises as private capital becomes more meaningful in the MBS market as well as considering other potential opportunities including origination and servicing.”

American Capital Agency Corp. closed on Wednesday at $21.61.