Compass Point Lowers PT on Two Harbors Investment (TWO)
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Price: $12.01 -0.25%
Rating Summary:
4 Buy, 20 Hold, 1 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 12 | Down: 23 | New: 22
Rating Summary:
4 Buy, 20 Hold, 1 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 12 | Down: 23 | New: 22
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Compass Point trimmed its price target on Neutral-rated Two Harbors Investment (NYSE: TWO) from $14.75 to $13.25 on Silver Bay share distribution.
The analyst comments: "We reiterate our Neutral rating and decrease our price target to $13.25 from $14.75 to account for the Silver Bay share distribution and a modestly higher required return on the MBS investment portfolio. While the near term outlook for levered MBS investing remains stable and the company has made significant progress in their business diversification efforts, the share price reflects this optimism and further multiple expansion would require a more dramatic re-deployment of capital. TWO now has a demonstrated track record of investing in alternative MBS assets. Further investments in asset classes such as whole loans, excess MSRs as well as other new business initiatives will continue to differentiate TWO from other mortgage REITs and justify the premium valuation. However, unless a significantly higher level of capital is earmarked for MSR investments, which generally garners a higher valuation multiple, the MBS portfolio will remain the primary driver of value for TWO shares. Our $13.25 price target represents a premium valuation at 1.2x estimated 1Q13 book value per share (BVPS) of $11.11 and a pro-forma dividend yield of 9.7%."
For an analyst ratings summary and ratings history on Two Harbors Investment click here. For more ratings news on Two Harbors Investment click here.
Shares of Two Harbors Investment closed at $12.12 yesterday.
The analyst comments: "We reiterate our Neutral rating and decrease our price target to $13.25 from $14.75 to account for the Silver Bay share distribution and a modestly higher required return on the MBS investment portfolio. While the near term outlook for levered MBS investing remains stable and the company has made significant progress in their business diversification efforts, the share price reflects this optimism and further multiple expansion would require a more dramatic re-deployment of capital. TWO now has a demonstrated track record of investing in alternative MBS assets. Further investments in asset classes such as whole loans, excess MSRs as well as other new business initiatives will continue to differentiate TWO from other mortgage REITs and justify the premium valuation. However, unless a significantly higher level of capital is earmarked for MSR investments, which generally garners a higher valuation multiple, the MBS portfolio will remain the primary driver of value for TWO shares. Our $13.25 price target represents a premium valuation at 1.2x estimated 1Q13 book value per share (BVPS) of $11.11 and a pro-forma dividend yield of 9.7%."
For an analyst ratings summary and ratings history on Two Harbors Investment click here. For more ratings news on Two Harbors Investment click here.
Shares of Two Harbors Investment closed at $12.12 yesterday.
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