Diversified Model Drives Double-Digit Returns: Why Annaly Capital Management Earned An Upgrade - Annaly Capital Management (NYSE:NLY)

Piper Sandler & Co analyst Crispin Love upgraded Annaly Capital Management Inc NLY to Overweight from Neutral at a slightly increased price target of $21.5 (prior $20).
The analyst is bullish on the above-consensus Q1 2023 results reported last week.
NLY's Q1 core EPS exceeded the consensus of $0.76 and Piper Sandlers' estimate of $0.74.
Love praises NLY's ability to achieve a positive economic return and maintain flattish tangible book value (outpacing agency mREIT peers) in Q1, amid a challenging market environment.
NLY's diversified model of agency MBS, mortgage servicing rights, and residential credit strengthens the analyst's confidence in the stock and expects it to drive double-digit returns across strategies.
The analyst expects agency spreads to tighten over the next year as the Fed reaches its terminal rate, which can drive the company's tangible book value.
Although NLY decreased its quarterly dividend to $0.65 from $0.80 in mid-march, Love expects it to maintain the annualized dividend run rate of $2.60.
The analyst increased estimates for 2023 operating EPS to $2.88 (from $2.83) and 2024 operating EPS to $2.80 (from $2.73).
Price Action: NLY shares are trading lower by 2.07% at $18.92 on the last check Tuesday.