Nomura Securities Downgrades ARMOUR Residential (ARR) to Reduce

Nomura Securities downgraded ARMOUR Residential (NYSE: ARR) from Neutral to Reduce with a price target of $16.00 (from $23.00).

Analyst Brock Vandervliet commented, "ARR’s performance demonstrates a central risk of the mortgage REIT structure: unsuccessful portfolio construction and high leverage that generates persistent book value decline. ARR produced the worst economic return across our coverage in 2015, a trend that looks set to continue this year. Given that the sector is valued based on book value multiples, ARR presents a value trap for investors attracted by the “low valuation” while the foundation of the valuation sinks further. As an Agency REIT, these issues can be addressed in short order, and we describe a series of steps that we believe management and the board should carefully consider."

For an analyst ratings summary and ratings history on ARMOUR Residential click here. For more ratings news on ARMOUR Residential click here.

Shares of ARMOUR Residential closed at $19.65 yesterday.

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