Fannie Mae (OTCMKTS:FNMA) Stock Falls 8.6% After Analyst Downgrade

Key Points

• Fannie Mae shares fell 8.6% to $4.27 after Keefe, Bruyette & Woods cut its price target from $6.25 to $3.50 and maintained an “underperform” rating.
• Analyst sentiment is mostly cautious: the stock has an average “hold” rating and a consensus price target of $9.70, while BTIG also downgraded the shares to “neutral.”
• Fannie Mae exceeded quarterly expectations with earnings of $0.68 per share and revenue of $7.57 billion, but reported a negative 76.66% return on equity and has limited institutional ownership at 0.02%.

Shares of Fannie Mae (OTCMKTS:FNMA - Get Free Report) traded down 8.6% during trading on Monday after Keefe, Bruyette & Woods lowered their price target on the stock from $6.25 to $3.50. Keefe, Bruyette & Woods currently has an underperform rating on the stock. Fannie Mae traded as low as $4.27 and last traded at $4.27. Approximately 4,677,337 shares were traded during trading, a decline of 9% from the average daily volume of 5,114,095 shares. The stock had previously closed at $4.67.

A number of other research firms also recently commented on FNMA. BTIG Research downgraded shares of Fannie Mae from a "buy" rating to a "neutral" rating in a research note on Tuesday, June 16th. Wedbush reissued a "neutral" rating and issued a $8.00 target price on shares of Fannie Mae in a research report on Thursday, July 30th. Finally, B. Riley Financial reduced their price target on shares of Fannie Mae from $8.00 to $7.00 and set a "neutral" rating on the stock in a research report on Thursday, July 30th. One equities research analyst has rated the stock with a Strong Buy rating, four have issued a Hold rating and one has assigned a Sell rating to the company. Based on data from MarketBeat, the stock has an average rating of "Hold" and a consensus target price of $9.70.

Hedge Funds Weigh In On Fannie Mae

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

Fannie Mae Stock Performance

The company has a market cap of $4.95 billion, a P/E ratio of 106.78 and a beta of 1.70. The stock has a 50 day moving average price of $5.86 and a 200 day moving average price of $6.46.

Fannie Mae (OTCMKTS:FNMA - Get Free Report) last issued its 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 business had revenue of $7.57 billion for the quarter, compared to analysts' expectations of $7.32 billion. As a group, equities research analysts predict that Fannie Mae will post 2.63 earnings per share for the current year.

Fannie Mae Company Profile

Fannie Mae, formally known as the Federal National Mortgage Association, is a government-sponsored enterprise that supports liquidity and stability in the U.S. housing finance system. The company does not generally lend directly to homebuyers. Instead, it purchases qualifying residential mortgages from approved lenders, providing those institutions with funds to originate additional loans.

Fannie Mae finances its activities primarily by issuing debt and mortgage-backed securities. It also guarantees the timely payment of principal and interest on many mortgage-backed securities backed by the loans it purchases.

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