Compass Point Maintains a 'Buy' on Apollo Residential Mortgage (AMTG); Cutting PT After Capital Raise
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Price: $13.64 --0%
Rating Summary:
4 Buy, 3 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 11 | Down: 12 | New: 9
Rating Summary:
4 Buy, 3 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 11 | Down: 12 | New: 9
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Compass Point maintains a 'Buy' on Apollo Residential Mortgage (NYSE: AMTG) price target lowered from $20 to $19.
Analyst, Jason Stewart, said, "In a move that caught us off guard, on Tuesday, April 17, AMTG issued 13.9mm shares in a secondary offering raising $254mm of gross proceeds at an 8.4% and 12% discount to 4Q11 book value per share (BVPS) and 1Q12 estimated BVPS, respectively. While we believe the capital raise will be modestly accretive to earnings given the current portfolio mix and market based spreads, we do not expect the earnings accretion to be sufficient enough to prompt a dividend increase. We are raising our 2012 EPS estimate to $2.96 from $2.72 and reiterate our outlook for $3 per share in dividends in 2012."
"Given the dilution to book value from this equity raise, we believe the valuation of AMTG shares will be capped at BVPS until the company demonstrates sustained execution of their strategy investing in a balanced portfolio of Agency and non-Agency MBS." (However, Stewart said shares are fundamentally cheap and would accumulate under $17.25)
For an analyst ratings summary and ratings history on Apollo Residential Mortgage click here. For more ratings news on Apollo Residential Mortgage click here.
Shares of Apollo Residential Mortgage closed at $17.77 yesterday.
Analyst, Jason Stewart, said, "In a move that caught us off guard, on Tuesday, April 17, AMTG issued 13.9mm shares in a secondary offering raising $254mm of gross proceeds at an 8.4% and 12% discount to 4Q11 book value per share (BVPS) and 1Q12 estimated BVPS, respectively. While we believe the capital raise will be modestly accretive to earnings given the current portfolio mix and market based spreads, we do not expect the earnings accretion to be sufficient enough to prompt a dividend increase. We are raising our 2012 EPS estimate to $2.96 from $2.72 and reiterate our outlook for $3 per share in dividends in 2012."
"Given the dilution to book value from this equity raise, we believe the valuation of AMTG shares will be capped at BVPS until the company demonstrates sustained execution of their strategy investing in a balanced portfolio of Agency and non-Agency MBS." (However, Stewart said shares are fundamentally cheap and would accumulate under $17.25)
For an analyst ratings summary and ratings history on Apollo Residential Mortgage click here. For more ratings news on Apollo Residential Mortgage click here.
Shares of Apollo Residential Mortgage closed at $17.77 yesterday.
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