Fannie Mae (OTCMKTS:FNMA) Shares Up 5.4% - Still a Buy?

Key Points

• Fannie Mae shares rose 5.4% to $3.93 in Wednesday trading, despite volume falling 80% below the average daily level.
• Analysts remain cautious, with five Hold ratings and one Sell rating; the consensus rating is “Reduce”, although the average price target of $8.70 is above the current share price.
• The company exceeded quarterly expectations, reporting $0.68 in EPS versus $0.63 expected and $7.57 billion in revenue versus $7.32 billion estimated, but it posted negative return on equity of 76.66%.

Fannie Mae (OTCMKTS:FNMA - Get Free Report)'s stock price traded up 5.4% on Wednesday. The stock traded as high as $4.05 and last traded at $3.93. 1,055,912 shares changed hands during trading, a decline of 80% from the average daily volume of 5,241,042 shares. The stock had previously closed at $3.73.

Wall Street Analyst Weigh In

A number of research analysts have issued reports on the stock. Keefe, Bruyette & Woods decreased their price target on shares of Fannie Mae from $6.25 to $3.50 and set an "underperform" rating for the company in a report on Monday, September 28th. 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, October 12th. B. Riley Financial lowered their price target on Fannie Mae from $8.00 to $7.00 and set a "neutral" rating on the stock in a research report on Thursday, July 30th. Finally, Wedbush reissued a "neutral" rating and issued a $8.00 price objective on shares of Fannie Mae in a report on Thursday, July 30th. Five analysts have rated the stock with a Hold rating and one has issued a Sell rating to the stock. According to MarketBeat.com, the stock currently has an average rating of "Reduce" and an average price target of $8.70.

Fannie Mae Stock Performance

The stock has a market capitalization of $4.48 billion, a PE ratio of 96.65 and a beta of 1.68. The stock's 50 day moving average is $5.14 and its two-hundred day moving average is $6.24.

Fannie Mae (OTCMKTS:FNMA - Get Free Report) last issued its quarterly earnings results on Wednesday, July 29th. The financial services provider reported $0.68 earnings per share (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 firm had revenue of $7.57 billion for the quarter, compared to analyst estimates of $7.32 billion. Equities research analysts expect that Fannie Mae will post 2.63 EPS for the current fiscal year.

Institutional Investors Weigh In On Fannie Mae

An institutional investor recently bought a new stake in Fannie Mae stock. Hennessy Advisors Inc. bought a new stake in Fannie Mae (OTCMKTS:FNMA - Free Report) in the second quarter, according to its most recent filing with the Securities & Exchange Commission. The institutional investor bought 30,000 shares of the financial services provider's stock, valued at approximately $195,000. 0.02% of the stock is currently owned by institutional investors and hedge funds.

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 qualifying residential mortgage loans from approved lenders and helping provide liquidity so those lenders can continue offering mortgage financing to homebuyers and homeowners.

Fannie Mae finances its activities primarily by issuing debt and mortgage-backed securities. It also guarantees certain mortgage-backed securities, helping connect mortgage lenders with institutional investors.

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