Freddie Mac initiated with an Outperform at Mizuho

Mizuho analyst Dan Dolev initiated coverage of Freddie Mac (FMCC) with an Outperform rating and $9 price target Fannie and Freddie are the “backbone” of the $14.3 trillion U.S. secondary residential mortgage market, the analyst tells investors in a research note. The firm says the company’s core guarantee franchise is “amongst the best businesses one could hope for.” It offers a fee-based, asset-light business that’s geographically diversified, and implicitly backed by the U.S. government, contends Mizuho. The firm’s base cases assign a 30% probability for Fannie and 20% probability for Freddie of a “fast exit” by 2028 for the U.S. government. These are slightly ahead of the market’s implied probabilities, Mizuho says.