On Thursday, Janney, a financial services firm, initiated coverage on MFA Financial Inc . (NYSE:MFA) with a Buy rating, setting a price target of $14.00.
"MFA is a leader in the mortgage sector with a diversified investment portfolio and the capacity and flexibility to invest across the mortgage market," analsyts at Janney said in their note.
The report pointed out the growing significance of private capital in the U.S. mortgage market, including both within the agency Mortgage-Backed Securities (MBS) market and beyond the Government-Sponsored Enterprise (GSE) lending scope.
According to Janney, MFA Financial's shares are currently trading at a considerable discount when compared to both the current Generally Accepted Accounting Principles Book Value Per Share (GAAP BVPS) of $13.77 and the economic Book Value Per Share (BVPS) of $14.46.
Janney's analysts predict a mid-single-digit growth in BVPS for MFA Financial, along with an expansion of the multiple toward the economic book value. The firm's $14 fair value estimate is based on a multiple of approximately 1.0x adjusted economic book value per share. Additionally, the estimate suggests a pro forma dividend yield of 10.0%.
The coverage initiation by Janney reflects an anticipation of a total return of approximately 53% if their fair value estimate is achieved. This outlook is based on the current trading discount and the potential for growth and value realization in MFA Financial's stock.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.