AGNC Investment Corp: Solid Fundamentals and MBS Tailwinds, But Limited Upside Justify a Hold Rating

BTIG analyst Eric Hagen has maintained their neutral stance on AGNC stock, giving a Hold rating today.

Eric Hagen has given his Hold rating due to a combination of factors related to both valuation and the current mortgage-backed securities environment. He views AGNC as one of the most efficient vehicles for gaining leveraged exposure to Agency MBS spreads, and recent spread tightening—supported by sizable GSE purchases—has already driven a strong rebound in book value and total return. However, with MBS spreads now trading inside their long-term average and the stock’s premium valuation reflecting much of this improvement, he believes the upside from current levels is more limited. He also notes that policy support from the GSEs should help keep spreads more stable, which is constructive, but not enough to justify a more aggressive stance at today’s pricing.

At the same time, Hagen points out that there are other mortgage REITs offering more attractive income opportunities relative to AGNC, such as Dynex, which currently provides a better yield pickup in his view. AGNC’s recent quarterly results, including robust economic returns and rising NAV, confirm that the company performs well in a favorable rate and spread backdrop, but that performance also underscores how much of the recovery has already been captured. Given the combination of solid fundamentals, supportive technicals from GSE buying, and a valuation that already discounts much of the good news, he concludes that AGNC is appropriately valued rather than under- or overvalued. This balanced risk‑reward profile leads him to maintain a Hold recommendation instead of upgrading to a Buy.

In another report released today, Barclays also maintained a Hold rating on the stock with a $10.00 price target.