Fannie Mae (OTCMKTS:FNMA) Shares Gap Down on Analyst Downgrade

Shares of Fannie Mae (OTCMKTS:FNMA) gapped down before the market opened on Monday after Mizuho downgraded the stock from an outperform rating to a neutral rating. The stock had previously closed at $4.0435, but opened at $3.90. Mizuho now has a $5.00 price target on the stock. Fannie Mae shares last traded at $3.61, with a volume of 1,702,210 shares trading hands.

FNMA has been the subject of several other research reports. Keefe, Bruyette & Woods decreased their price objective on shares of Fannie Mae from $6.25 to $3.50 and set an “underperform” rating for the company in a research note on Monday, September 28th. Wedbush restated a “neutral” rating and issued a $8.00 target price on shares of Fannie Mae in a research note on Thursday, July 30th. B. Riley Financial reduced their target price on Fannie Mae from $8.00 to $7.00 and set a “neutral” rating for the company in a report on Thursday, July 30th. Finally, BTIG Research lowered Fannie Mae from a “buy” rating to a “neutral” rating in a report on Tuesday, June 16th. Five research analysts have rated the stock with a Hold rating and one has given a Sell rating to the company’s stock. Based on data from MarketBeat, the company presently has a consensus rating of “Reduce” and an average target price of $8.70.

Key Stories Impacting Fannie Mae

Here are the key news stories impacting Fannie Mae this week:

• Positive Sentiment: A potential loan-sale transaction could support Fannie Mae’s valuation by improving liquidity and highlighting the value of its mortgage assets, although the financial impact and timing remain uncertain. Fannie Mae Stock May Trade At A Premium On Loan Sale News
• Neutral Sentiment: A financial comparison of Fannie Mae and ECB Bancorp gives investors additional valuation and operating context, but the report does not appear to introduce a major new catalyst for FNMA. Fannie Mae and ECB Bancorp Financial Survey
• Neutral Sentiment: Changes to the credit-score system used by Fannie Mae and Freddie Mac could eventually reduce mortgage costs and expand access to credit, but critics warn that alternative scoring methods may increase underwriting risk. A Credit-Score Shift at Fannie and Freddie Is Shaking Up the Mortgage Market
• Negative Sentiment: Mizuho downgraded FNMA from “outperform” to “neutral” and cut its price target to $5.00, citing higher mortgage rates and obstacles to releasing Fannie Mae from conservatorship. Although the target remains above the recent $3.47 level, the rating change signals reduced confidence in near-term upside. Fannie Mae Cut to Hold at Mizuho
• Negative Sentiment: Reports that privatization hopes are fading have weighed on Fannie Mae and Freddie Mac shares. Delays in a conservatorship exit, rising mortgage rates and other regulatory hurdles reduce the likelihood of a near-term value-unlocking event. Fannie Mae, Freddie Mac Stocks Sink on Fading Privatization Hopes
• Negative Sentiment: Investor Michael Burry warned that Treasury-related dilution could severely reduce or even eliminate the value of common shares, prompting a shift toward preferred stock. His warning reinforces the key risk facing FNMA shareholders if the companies are recapitalized. Burry Cites Treasury Dilution Risk

Institutional Inflows and Outflows

An institutional investor recently bought a new position in Fannie Mae stock. Hennessy Advisors Inc. acquired a new stake in shares of Fannie Mae (OTCMKTS:FNMA) in the 2nd quarter, according to the company in its most recent disclosure with the Securities and Exchange Commission (SEC). The fund acquired 30,000 shares of the financial services provider’s stock, valued at approximately $195,000. 0.02% of the stock is owned by institutional investors and hedge funds.

Fannie Mae Price Performance

The firm’s 50 day moving average is $5.38 and its 200 day moving average is $6.33. The company has a market cap of $4.02 billion, a PE ratio of 86.77 and a beta of 1.68.

Fannie Mae (OTCMKTS:FNMA) last issued its quarterly earnings results on Wednesday, July 29th. The financial services provider reported $0.68 EPS for the quarter, topping analysts’ consensus estimates of $0.63 by $0.05. The firm had revenue of $7.57 billion for the quarter, compared to analyst estimates of $7.32 billion. Fannie Mae had a net margin of 4.59% and a negative return on equity of 76.66%. As a group, analysts anticipate that Fannie Mae will post 2.63 EPS for the current year.

About Fannie Mae

Fannie Mae, formally known as the Federal National Mortgage Association, is a government-sponsored enterprise that supports the U.S. housing finance system. It operates in the secondary mortgage market, purchasing eligible residential mortgage loans from approved lenders and providing liquidity that helps banks and other mortgage originators continue making loans to homebuyers and homeowners.

Fannie Mae primarily supports single-family and multifamily housing. It finances and securitizes qualifying mortgage loans into mortgage-backed securities and generally guarantees the timely payment of principal and interest to investors in those securities.