Citi Initiates Coverage on American Capital Agency Corp (AGNC) with a Hold

June 24, 2008 8:41 AM EDT

Citi initiates coverage on American Capital Agency Corp (Nasdaq: AGNC) with a Hold. Price target $17.

Citi analyst says, "We are initiating coverage of AGNC with a Hold/Speculative rating. AGNC is a residential mortgage REIT focused on owning agency MBS...The Fed — We remain cautious on the agency focused mortgage REITs as the futures market is suggesting the Fed may start raising short-term interest rates this year. Historically, agency mortgage REIT stocks and dividends come under pressure when the Fed raises interest rates. However, it's unclear how aggressive the Fed can be in the face of a weakening US economy...Should we get more data points supporting Fed rate increases, we could get more negative on the outlook."

American Capital Agency Corp. is a mortgage real estate investment trust (REIT) that invests in agency securities for which the principal and interest payments are guaranteed by a United States Government agency, such as the Government National Mortgage Association (GNMA), a United States Government-sponsored entity, such as the Federal National Mortgage Association (FNMA) and the Federal Home Loan Mortgage Corporation (FHLMC).

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