BTIG analyst Eric Hagen has maintained their neutral stance on ARR stock, giving a Hold rating yesterday.
Eric Hagen has given his Hold rating due to a combination of factors that reflect both potential opportunities and risks for ARMOUR Residential REIT. The stock is currently trading below its net asset value with a high yield, which could offer some upside potential if mortgage-backed securities (MBS) spreads tighten. However, the leverage employed by the company means that any increase in market volatility or widening of spreads could lead to significant downside, limiting the attractiveness of increasing leverage further.
Additionally, while the company has successfully raised capital and improved liquidity, the current market conditions and the company’s hedging strategy suggest a cautious approach. The company’s dividend yield is relatively high, but the risk-adjusted return is not as favorable compared to other options like Dynex. Therefore, Hagen’s Hold rating reflects a balanced view, acknowledging both the potential for short-term gains and the risks associated with the current spread environment and leverage constraints.