FBR Capital reiterates a 'Outperform' on MFA Mortgage (NYSE: MFA), PT $9.
FBR analyst says, "We view this rapid deployment as additional evidence that MFA's flexible business model between agency and nonagency MBS is optimally positioned to create attractive risk-adjusted total returns, especially in the current operating environment. During 1Q11, management took advantage of wide agency spreads (180 bps to 225 bps depending on the asset) and found attractive relative value among non-agency MBS in conjunction with global credit concerns in March (Middle East conflict, European sovereign issues). In light of stronger-than-expected 1Q11 results, we are increasing our forward normalized quarterly earnings estimate to $0.28. Likewise, we believe that upward pressure on the current $0.235 dividend exists on a go-forward basis. We believe shares are attractive at current levels, trading at a 4% premium to last reported book value of $7.84 and at an estimated 13% forward dividend yield based on a conservative $0.26 quarterly payout."
MFA Financial shares attractive at current levels, says FBR Capital
FBR believes MFA Financial's conservative approach to running its business makes the stock attractive in the current volatile macro environment. The firm reiterates an Outperform rating on the stock with a $9 price target