logo
  Join        Login             Stock Quote

Two Harbors Investment (TWO) Initiated As 'Buy' By Deutsche Bank; PT $12.75

 December 21, 2012 02:33 PM


(By Balachander) Two Harbors Investment Corp. (NYSE: TWO) shares were initiated with a "Buy" rating and price target of $12.75 by Deutsche Bank (DB), given the attractive valuation and return expectations.

The bank expects TWO to continue generating attractive ROEs and post earnings growth in 2013 as it benefits from less prepayment-sensitive agency assets, an increasing mix of non-agency assets, income from Silver Bay, and new investments in whole loans.

This, DB believes, is likely to lead to securitizations next year.

The bank said 98 percent of TWO's agency RMBS are backed by low balance, high LTV, HECM, seasoned, low FICO and otherwise prepayment protected pools.

[Related -Are These High-Yield Stocks About To Cut Their Dividend?]

Given TWO's deeply discounted non-agency securities, accretion of purchase discounts may offset some of the premium amortization expense should higher-than-expected prepayments occur, DB said.

Silver Bay is a newly organized REIT focused on acquiring, renovating, leasing, and managing undervalued single-family residential properties for rental income and resale. TWO will own 48 percent of Silver Bay shares after contributing its existing portfolio of about 2,200 properties and $50 million in cash, DB noted.

The stock, which has been trading in the 52-week range of $9.03 to $12.20, traded flat at $11.59 on Friday.

iOnTheMarket Premium
Advertisement

Advertisement


Post Comment -- Login is required to post message
Name:  
Alert for new comments:
Your email:
Your Website:
Title:
Comments:
 

rss feed

Latest Stories

article imageADP: US February Payrolls Continue To Grow, But At Slower Rate

Payrolls at US companies posted another respectable gain in February, advancing 212,000 over the previous read on...

article imageAre You Prepared For Negative Interest Rates?

Last Tuesday, all eyes were on Federal Reserve Chief Janet Yellen. In prepared testimony, she offered a few read on...

article imageGreek Problems Born from Socialism

Our weekly commentaries provide Euro Pacific Capital's latest thinking on developments in the global read on...

article imageThe Eurozone: On The Road To Recovery With A Lingering Risk

Back in September the idea that the Eurozone's economy could potentially undergo a recovery (see post) was read on...

Advertisement
Popular Articles

Advertisement
Daily Sector Scan
Partner Center

Related Articles:

The Closest Thing To 'Free Money' I've Ever Seen
More Articles on: Finance



Fundamental data is provided by Zacks Investment Research, and Commentary, news and Press Releases provided by YellowBrix and Quotemedia.
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. iStockAnalyst.com is not an investment adviser and does not provide, endorse or review any information or data contained herein.
The blog articles are opinions by respective blogger. By using this site you are agreeing to terms and conditions posted on respective bloggers' website.
The postings/comments on the site may or may not be from reliable sources. Neither iStockAnalyst nor any of its independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. You are solely responsible for the investment decisions made by you and the consequences resulting therefrom. By accessing the iStockAnalyst.com site, you agree not to redistribute the information found therein.
The sector scan is based on 15-30 minutes delayed data. The Pattern scan is based on EOD data.