Bank of America Securities analyst Derek Hewett reiterated a Hold rating on AGNC Investment yesterday and set a price target of $10.00.
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Derek Hewett has given his Hold rating due to a combination of factors influencing AGNC Investment’s performance. Despite a solid quarter with a 10.6% economic return, AGNC’s core EPS of $0.35 fell short of both consensus and BofA forecasts, primarily due to reduced spread income. This decline was attributed to the maturity of legacy swaps and capital deployment timing, although a modest improvement in spread income is anticipated as the Federal Reserve eases its policies.
Moreover, while the investment outlook for Agency MBS remains appealing with a levered ROE of approximately 17%, indicating potential dividend stability, the overall risk/reward scenario appears balanced. The tangible book value per share increased by 6% to $8.28, driven by decreased interest rate volatility and stable mortgage spreads, which supports book value stability. Despite these positive aspects, the adjustments to future earnings estimates and the alignment of the price objective with the current market price suggest a neutral stance, leading to the Hold rating.
AGNC’s price has also changed moderately for the past six months – from $8.610 to $10.090, which is a 17.19% increase.