UPDATE: MLV & Co Upgrades Resource Capital Corp. to Buy, Reiterates $6 PT on Compelling Prospective Return

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

from Hold to Buy, and reiterated a $6.00 price target. In the report, MLV & Co noted, “Notwithstanding small cuts to our estimates of 2014 and 2015 AFFO/Share, we are upgrading RSO shares to a Buy. These shares have plunged nearly 10% in value over the last four weeks--along with the shares of most other mortgage REIT stocks. We would attribute that to rate fears and what we would characterize as a general ‘uneasiness' over the length of the current interest rate and credit cycles. We feel this concerns are misplaced. Please see our industry note, The Agency, or ‘Rates', Opportunity dated 7/27/2014 here for our rationale. Furthermore, the changes to our AFFO and GAAP earnings projections did not alter our price target of $6.00, which is based upon a sustainable dividend and stable book value assumption (see Valuation). At that level investors buying in at current market values will have enjoyed price appreciation of 20% over the next 12 months. Adding a projected dividend yield of 16% over the same timeframe brings the total return potential to 36% from the prices at which RSO shares now change hands. We find a prospective return of 36%--nearly 2/5 of it in cash--very compelling.” Resource Capital Corp. closed on Wednesday at $4.98.