Citi Research's Donald Fandetti keeps his Neutral rating on Annaly Capital (NLY +0.2%), but boosts the price target to $11 from $9, suggesting a 17% total return over the next year if the dividend is included.
His $11 target comes from slapping a 0.9x multiple on Annaly's end-of-Q1 book value of $11.61 - inline with the average of other passive RMBS managers
As for dividend yield, Annaly's peers trade at an average of 12.5%, with a range of 11.1% to 18.3%. Fandetti applies a 11% yield to his forward 12-month dividend estimate of $1.20 to get to the $11 target.
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