Pair of upgrades for Annaly Capital

|About: Annaly Capital Managemen... (NLY)|By:, SA News Editor

His Underperform rating on Annaly Capital (NYSE:NLY) was less a "rate" call and more about volatility, says FBR's Daniel Altscher. He believed Annaly more at-risk than peers from prepays and cost-of-financing. While those risks remain, and Annaly at a 17% discount to book has a higher valuation than the rest of the sector at a 21% discount, there are positive developments.

Namely, the $1B buyback authorization and the company's decision to invest in non-agency MBS. Also, the commercial real estate platform is gaining traction, and Q3 should have been a benign prepay environment.

He upgrades to Market Perform. The new price target of $11 (up from $10) compares to last night's close of $10.19.

BAML upgrades Annaly to Neutral from Underperform, with price target of $10.50 up from $8.50.

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