Bank of America Merrill Discusses Secondary From Annaly Capital Management

Bank of America Merrill Lynch is out with a research report on Annaly Capital Management NLY after the company announced a secondary offering last night. It has a Buy rating and a $18.50 price target on shares. In a note to clients, Bank of America Merrill Lynch writes, "Annaly Capital issued 120M shares of common (~$2.1B) yesterday after the close at $17.70 p.s., which appears accretive to both EPS and BV, based on our forecast. We project NLY will continue to generate an ROE of ~16% for the remainder of 2011, due to the attractive investment backdrop and favorable financing environment. Near-term trends remain quite favorable for NLY, in our opinion, and we anticipate persistent investor interest in NLY, given its high yield and defensive nature. We estimate that NLY's pro forma BV has risen to $17.09 from $15.76 at the end of Q1 after incorporating the new shares and the impact of falling rates during the quarter, which should serve to further underpin the share price." Shares of NLY are off 27 cents to $18.05, a loss of 1.47%.