UPDATE: Wunderlich Securities Reiterates On MFA Financial On Improving Credit


In a report published Tuesday, Wunderlich Securities analyst Merrill Ross reiterated a Hold rating on MFA Financial (NYSE: MFA), and raised the price target from $8.00 to $9.00.

In the report, Wunderlich Securities noted, “Hold-rated MFA Financial (MFA) reported 2Q14 EPS of $0.20, in-line with dividends and our estimate. BVPS increased Q/Q to $8.37. MFA is levered to improving credit; the legacy non-agency bonds it purchased (on average) 8 years ago at a discount currently represent about 80% LTV, as principal has been paid down and home prices have appreciated. The very factors that contribute to higher fair market value of its portfolio price MFA out of the market on the margin. The company is venturing into other credit sensitive MBS, but issuance and trading volumes are limited. As we roll out our estimates through 2015, we are increasing our target by $1/sh to $9. This is roughly in-line with forward BVPS, and is consistent with the peer group valuation. Maintain Hold.”

MFA Financial closed on Monday at $8.18.

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