BGB Securities Initiates Coverage on Cypress Sharpridge (CYS) with a Buy

August 6, 2009 9:30 AM EDT

BGB Securities initiates coverage on Cypress Sharpridge (NYSE: CYS) with a Buy. Price target $15.

BGB analyst says, "We think investors should expect a two-quarter ramp up in the portfolio following the June, 2009 IPO because the company used forward settlements to acquire targeted assets. Investor patience should be rewarded with a dividend run rate of $2.40 during 2010."

"Our 12-month price target is $15, which represents a 22% premium to trailing book value. We think the shares will benefit from price support as the dividend ramps up over the next three quarters. The company should operate in a range between a 17% and 20% return on equity in 2010, with a low cost basis in acquired assets and leverage at or below the average level of peer companies. Generally, dividends provide price support, and we expect the shares to trade to a premium to book value over time as capital is invested and allocated over time."

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