Wunderlich Securities Reiterates Buy Rating on Annaly Capital Management (NLY)

Wunderlich Securities is out with a research report this morning, where it reiterates its Buy rating on Annaly Capital Management NLY; it has a $18.00 price target on the stock. The WS analysts cited the company's recent dividend cu, from $0.68 to $0.64. Although the analysts had estimated that the company's earnings would support the dividend, there were warning signs that earnings momentum could be turning, and they believe this dividend cut presages continued pressure on the dividend in 2011. The analysts noted that NLY is not a one-trick pony and has fee-based businesses under development that could support mid-teens ROEs, even on the back side of the rate cycle. As for valuation, the analysts remarked, “We believe that the projected earnings of $2.50 per share in 2011 could support dividends on the order of $2.40, or $0.60 per share per quarter. On an absolute and relative basis, we believe this return is attractive, particularly taking the liquidity of the shares into consideration.”