Freddie Mac price target lowered to $8.50 from $9 at Keefe Bruyette

Keefe Bruyette lowered the firm’s price target on Freddie Mac (FMCC) to $8.50 from $9 and keeps an Underperform rating on the shares. The firm expects the government sponsored enterprises to report “solid” Q1 reports citing their “strong business model with earnings driven by the size of the guarantee portfolio.” However, the impact from ramped up purchase activity is likely to be modest given the small size of the retained portfolio versus the total book of business, the analyst tells investors in a research note. Keefe cites a change in the probability weightings that drive the reduced price targets, as it assumes a slightly lower probability of success as well as a lower conversion price for the senior preferred shares. The likelihood of privatization occurring before the midterm elections is low, the firm contends.