FBR Capital Maintains an 'Market Perform' on CreXus Investment (CXS); Acquisition at $14 Rejected, 50M Shares Sold at $11.50, Lower Price Target

FBR Capital maintains an 'Market Perform' on CreXus Investment Corp. (NYSE: CXS), lowers PT from $14.25 to $12.

FBR analyst says, "The rationale for our lower price target is simple: We estimate pro forma book value to be $11.71, and we do not believe that shares warrant a significant premium to book value at this juncture. A premium may be warranted when 1) the dividend ramps higher which, in our opinion, could take time as CXS restructures the Barclays portfolio (acquired in conjunction with the capital raise) and, more importantly, 2) management outlines a growth strategy beyond this single acquisition. A forward plan is necessary in that CXS, since its IPO, has been very conservative in its capital allocation. From our vantage point, we believe shareholders would have been better suited if the CXS Board of Directors had accepted the acquisition offer from Starwood Property Trust (Nasdaq: STWD) at $14/share." (FBR lowers FY11 EPS estimate from $1.06 to $0.87)

For more ratings news on CreXus Investment Corp. click here and for the rating history of CreXus Investment Corp. click here.

Shares of CreXus Investment Corp. closed at $12.15 yesterday.

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