Annaly Capital Downgraded to “Neutral” at Compass Point; Lower Net Interest Margins Expected (NLY)


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Mortgage-based REIT Annaly Capital Management, Inc. ( NLY ) on Friday caught some tepid commentary from analysts at Compass Point Research.

The firm said it cut its rating from "Buy" to "Neutral" with a $17 price target. That target suggests zero upside to the stock's Thursday closing price of $16.89.

A Compass Point analyst commented, "Since upgrading our rating on the shares of NLY to Buy on April 9, 2012, NLY has achieved a total return of 8.4% compared to a total return of -3.4% for the S&P Index and -7.8% for the BKX. Over the near term, we expect an increase in prepayment speeds (both through increased regular way refi activity and an increasingly effective HARP 2.0 program) to have a negative impact on the net interest margin of NLY's portfolio. Over the intermediate term, however, many of the factors that have underpinned our positive thesis on the sector remain in place. We expect that the relatively steep yield curve, which has been anchored by the Fed, will remain in place through 2013."

Annaly shares posted small losses in premarket trading Friday.

The Bottom Line
Shares of Annaly Capital Management ( NLY ) have a 13.03% dividend yield, based on last night's closing stock price of $16.89. The stock has technical support in the $15.50 price area. If the shares can firm up, we see overhead resistance around the $17.50 price level.

Annaly Capital Management, Inc. ( NLY ) is not recommended at this time, holding a DARS™ Rating of 3.4 out of 5 stars.

Be sure to visit our complete recommended list of the Best Dividend Stocks , as well as a detailed explanation of our ratings system here .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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This article appears in: Investing , Stocks

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