Deutsche Bank Downgrades ARMOUR Residential (ARR) to Hold

February 15, 2013 7:39 AM EST
Get Alerts ARR Hot Sheet
Price: $21.66 -0.91%

Rating Summary:
    2 Buy, 8 Hold, 5 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 22 | Down: 34 | New: 34
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Deutsche Bank downgraded ARMOUR Residential (NYSE: ARR) from Buy to Hold with a price target of $6.75 (from $8.30).

The firm comments, "On February 13, ARR reported an estimated current BVPS range of $6.70 and $6.76, down 13% from the last reported BVPS of $7.77 at 9/30. Given the book value range and yesterday’s equity offering, we estimate pro forma post-deal book value of $6.73 per share. As a result of the BVPS decline and a reduction in our BV premium from 5% to 0%, we are reducing our target to $6.75 per share from $8.30 per share. Given our new target relative to the current valuation, we are reducing our rating to Hold."

Yesterday, ARR priced a secondary offering of 65 million shares at $6.84 per share, raising net proceeds estimate at roughly $440 million. "Given currently available spreads versus the existing portfolio ROEs, we believe the new capital can be deployed at slightly accretive levels assuming roughly 9.0x leverage," the firm notes.

For an analyst ratings summary and ratings history on ARMOUR Residential click here. For more ratings news on ARMOUR Residential click here.

Shares of ARMOUR Residential closed at $6.70 yesterday.

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