My broker just sent me this on CSE from analyst at FBW. It is an attractive long term buy but then we all knew that.
Key Points from FBW >n The March quarter was extremely strong in all regards. The >company delivered results in line with consensus expectations of $0.51 per >share while absorbing a $0.09+ loss tied to the sale of a portion of its >agency portfolio. Credit losses were significantly lower than expected and >most other measures of credit quality registered stability in overall loan >quality. >n The company reiterated its intent to deliver a $0.60 per quarter >dividend and indicated that it expects to successfully renew a major >credit facility up for renewal this year (the Citibank loan). >n Reflecting this good news, the stock is now trading above our >target price of $16. Given this, we are reducing our rating from Buy to >Neutral. >n The $16 valuation mark is based on our own assessment of the >company's current dividend-paying capacity, capitalized at 10% ($2.05 x >payout ratio 80% = $1.64/10.0%=$16.40). Read differently, were the >company to reduce its dividend to $0.41 per quarter, the stock could still >sport a 10%+ yield. >n The current dividend is $0.60 per quarter, or $2.40 per >year. Capitalizing this at the 13.6% median yield accorded the $1 billion >market cap. income stocks we follow, suggests a higher value for this >stock (IAD $2.40/13.4%=$17.91). Given this and the expectation that >targeted yields should improve over time, we view CapitalSource as an >attractive long-term hold. >
To your point, Analysts do not work for the general public. They have their own agenda. Following their advice is a deadly investment strategy, they are covering their butts and/or working for their big clients.