Fannie Mae (OTCMKTS:FNMA) Shares Gap Down - Should You Sell?

Key Points

• Fannie Mae shares fell sharply, opening at $3.90 after closing at $4.0435 and later trading near $3.61 on volume of roughly 1.7 million shares.
• Analyst sentiment is largely negative: five analysts rate the stock Hold and one rates it Sell, resulting in a consensus “Reduce” rating. Recent price targets include cuts to $7.00 from B. Riley and $3.50 from Keefe, Bruyette & Woods.
• The company exceeded quarterly earnings and revenue expectations, reporting $0.68 in EPS and $7.57 billion in revenue, but posted a negative 76.66% return on equity and has only minimal institutional ownership.

Fannie Mae (OTCMKTS:FNMA - Get Free Report)'s share price gapped down prior to trading on Monday. The stock had previously closed at $4.0435, but opened at $3.90. Fannie Mae shares last traded at $3.61, with a volume of 1,702,210 shares.

Analysts Set New Price Targets

FNMA has been the subject of several recent analyst reports. B. Riley Financial decreased their price objective on shares of Fannie Mae from $8.00 to $7.00 and set a "neutral" rating for the company in a report on Thursday, July 30th. Mizuho set a $5.00 target price on shares of Fannie Mae and gave the company a "neutral" rating in a research note on Monday. BTIG Research downgraded shares of Fannie Mae from a "buy" rating to a "neutral" rating in a report on Tuesday, June 16th. Keefe, Bruyette & Woods cut their target price on shares of Fannie Mae from $6.25 to $3.50 and set an "underperform" rating for the company in a research report on Monday, September 28th. Finally, Wedbush reissued a "neutral" rating and set a $8.00 target price on shares of Fannie Mae in a research report on Thursday, July 30th. Five analysts have rated the stock with a Hold rating and one has assigned a Sell rating to the stock. Based on data from MarketBeat.com, Fannie Mae has an average rating of "Reduce" and a consensus price target of $8.70.

Fannie Mae Stock Performance

The firm has a 50 day moving average of $5.47 and a two-hundred day moving average of $6.36. The stock has a market cap of $3.99 billion, a P/E ratio of 86.15 and a beta of 1.68.

Fannie Mae (OTCMKTS:FNMA - Get Free Report) 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. Fannie Mae had a negative return on equity of 76.66% and a net margin of 4.59%. The company had revenue of $7.57 billion during the quarter, compared to analyst estimates of $7.32 billion. On average, sell-side analysts anticipate that Fannie Mae will post 2.63 EPS for the current fiscal year.

Hedge Funds Weigh In On Fannie Mae

A hedge fund recently bought a new stake in Fannie Mae stock. Ratan Capital Management LP purchased a new stake in Fannie Mae (OTCMKTS:FNMA - Free Report) in the second quarter, according to its most recent Form 13F filing with the Securities and Exchange Commission. The institutional investor purchased 79,000 shares of the financial services provider's stock, valued at approximately $514,000. 0.02% of the stock is owned by hedge funds and other institutional investors.

Fannie Mae Company Profile

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.

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