Barclays Maintains an 'Overweight' on Invesco Mortgage Capital (IVR); Rocky Quarter, but Valuation Presents Strong Total Return Opportunity
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Price: $7.52 +0.53%
Rating Summary:
5 Buy, 10 Hold, 4 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 12 | Down: 23 | New: 22
Rating Summary:
5 Buy, 10 Hold, 4 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 12 | Down: 23 | New: 22
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Barclays maintains an 'Overweight' on Invesco Mortgage Capital (NYSE: IVR) price target of $20.00.
Barclays analyst says, "We continue to view IVR's valuation as attractive, despite the book value decline and net interest spread compression experienced in Q311, as the stock is trading at ~0.93x book value, with a dividend yield of over 20%. While we remain concerned about the swap book's drag on interest expense (up 22bps in 3Q) and potential declines in yields from prepayment concerns, we continue to forecast mid- to high-teens ROEs and view the opportunity for price appreciation (towards BVPS of $16.47) combined with the high-teens dividend yield as a significant total return opportunity."
"Still, with yields on new Agency investments lower than the current portfolio average, and funding costs relatively fixed given the large swaps position, we expect IVR could experience additional margin pressure, particularly if CPRs accelerate. Accordingly, we are revising down our 2011 and 2012 EPS estimates to $3.40 and $3.29 from $3.68."
For more ratings news on Invesco Mortgage Capital click here and for the rating history of Invesco Mortgage Capital click here.
Shares of Invesco Mortgage Capital closed at $15.38 yesterday.
Barclays analyst says, "We continue to view IVR's valuation as attractive, despite the book value decline and net interest spread compression experienced in Q311, as the stock is trading at ~0.93x book value, with a dividend yield of over 20%. While we remain concerned about the swap book's drag on interest expense (up 22bps in 3Q) and potential declines in yields from prepayment concerns, we continue to forecast mid- to high-teens ROEs and view the opportunity for price appreciation (towards BVPS of $16.47) combined with the high-teens dividend yield as a significant total return opportunity."
"Still, with yields on new Agency investments lower than the current portfolio average, and funding costs relatively fixed given the large swaps position, we expect IVR could experience additional margin pressure, particularly if CPRs accelerate. Accordingly, we are revising down our 2011 and 2012 EPS estimates to $3.40 and $3.29 from $3.68."
For more ratings news on Invesco Mortgage Capital click here and for the rating history of Invesco Mortgage Capital click here.
Shares of Invesco Mortgage Capital closed at $15.38 yesterday.
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