BTIG maintains ‘Buy’ on AGNC stock, citing stable dividend outlook By Investing.com

On Tuesday, BTIG kept a positive outlook on AGNC Investment Corp (NASDAQ:) stock, maintaining a Buy rating and a price target of $10.50. The firm’s analyst highlighted the sustainability of AGNC’s dividend, supported by a robust liquidity position exceeding $5 billion.

The company’s mortgage-backed securities (MBS) spreads are currently near +150 basis points over Treasuries, which the analyst believes limits the potential for significant spread widening, especially amid discussions of potential Federal Reserve rate cuts.

AGNC’s dividend has been perceived as one of the most reliable among mortgage real estate investment trusts (REITs), contributing to the company’s valuation stability. For the past year, the stock’s valuation has been buoyed around 1.10 times or higher, in part due to the dividend’s visibility and the stock’s performance relative to other high-yield income vehicles.

While there is some concern about extension risk at current rate levels, the analyst suggests that a more significant but less likely risk to the net asset value (NAV) would be a rapid and substantial drop in the 10-year Treasury yields. Despite these risks, the firm’s stance on AGNC remains unchanged, with the dividend’s strength being a key factor in the positive valuation.

AGNC’s financial strategy, including the building of substantial liquidity and the management of its MBS portfolio, appears to have positioned it well in the current economic environment.

The company’s focus on maintaining a stable dividend payout seems to have underpinned investor confidence and supported its valuation in the competitive mortgage REIT market.

In other recent news, AGNC Investment Corp has reported a strong economic return of 5.7% for the first quarter of 2024. The company’s core earnings per share matched the consensus estimate at $0.58, slightly exceeding BofA’s forecast of $0.55.

Despite a challenging investment environment in April, AGNC maintains strong liquidity and is poised to benefit from favorable long-term fundamentals for Agency Mortgage-Backed Securities (MBS).

BofA Securities and JPMorgan have both adjusted their outlook on AGNC, reducing the price target to $9.50 from the previous $10.00. BofA Securities maintains a Neutral stance on the stock, while JPMorgan holds an Overweight rating.

AGNC’s comprehensive income per share stood at $0.48, and the company announced that it raised approximately $240 million of common equity through an aftermarket offering.

The company’s management has maintained a positive outlook for Agency MBS, with returns on equity for incremental investments currently estimated at 16-18%. These are among the recent developments for AGNC Investment Corp.

InvestingPro Insights

InvestingPro data underscores the positive outlook on AGNC Investment Corp with a robust revenue growth of 237.72% over the last twelve months as of Q1 2024. Additionally, the company has demonstrated a strong gross profit margin of 100% in the same period. AGNC’s P/E ratio stands at 10.65, which may appeal to value investors seeking potentially undervalued stocks. The dividend yield is particularly noteworthy at 14.05%, reflecting AGNC’s commitment to returning value to shareholders, as also highlighted by the 17 consecutive years of maintained dividend payments—an InvestingPro Tip worth noting.

With the company trading near its 52-week high, at 96.33% of this benchmark, investors may consider the current share price reflective of the company’s recent financial performance and stability. Moreover, analysts predict the company will be profitable this year, which could further bolster investor confidence. For those looking to delve deeper into AGNC’s financials and future outlook, InvestingPro offers additional tips and insights. Using the coupon code PRONEWS24, readers can get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, granting access to valuable investment information and analysis.

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