Wunderlich Cuts Estimates and PT For Capstead

Capstead Mortgage Corporation CMO declared a curtailed dividend of $0.26 for 3Q2010, down from 2Q's $0.36 dividend, and Wunderlich believes that management must bear the burden of proof that dividends and earnings momentum can be reinstated once initial agency buyouts are completed. Wunderlich is also lowering its price target to $11.75 (from $12.25) due to returns that are below average, and it may take several quarters before Capstead can return to forward earnings momentum. Wunderlich also notes that peak run rates for dividends were in 2Q2009 at $0.58/share. 2010E EPS have been cut to $1.49 (from $1.70) and for 2011E EPS are cut to $1.56 (from $1.88). Wunderlich maintains its Hold rating for Capstead Mortgage Corporation, which closed yesterday at $11.81.