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CSE Message Board

  • holew holew May 7, 2008 11:24 PM Flag

    Latest from Ferris Baker Watts

    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.

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    • Thanks for the post. FBW has closely followed CSE so I was somewhat concerned about their change. JPM said as of 5/7 market out perform.

      IMO so many of these ratings get behind the curve. Everything they said was based on stock price which is at least up from its lows ---

      SO I guess we all should have bought at around $11 (forgot no analyst said that) hold here and do what at $17????? ---- and these guys get paid. At least the posters here seem to have some convection.

    • Don't you just love the CYA? They think the stock is attractive but downgrade it--they're covered either way!