Barclays Maintains an 'Overweight' on Cypress Sharpridge (CYS); Updating Estimates for 1Q11 Results

Barclays maintains an 'Overweight' on Cypress Sharpridge (NYSE: CYS), PT $15.

Barclays analyst says, "As a result of the forward settling purchases, net interest income fell short of expectations (they add interest expense without bringing on interest income until the contracts settle), but was still up 64% linked quarter due to a 36% increase in AEA from the February capital raise ($275.8MM). Also contributing was a 3bp drop on CYS's repo borrowing rate to 29bps. Management discussed continued tightening in their borrowing rates through the beginning of 2Q11 following the FDIC's increased charge on deposits. Repo rates have fallen to the low-mid 20's and we expect them to stabilize at this level in coming quarters. With a more modest reduction in asset yields (if any), we expect lower funding costs will lead to stable or moderately increased earnings over the next few quarters and a sustainable dividend at $0.60/shr. With the stock currently trading with a dividend yield over 19%, we reiterate our rating." (FY11 EPS estimate raised from $2.56 to $2.61)

For more ratings news on Cypress Sharpridge click here and for the rating history of Cypress Sharpridge click here.

Shares of Cypress Sharpridge closed at $12.22 yesterday.

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