UPDATE: Compass Point Reiterates Buy Rating, Raises PT on Western Asset Mortgage Capital

In a report published Wednesday, Compass Point Research & Trading reiterated its Buy rating on Western Asset Mortgage Capital Corp. (NYSE: WMC), and slightly raised its price target from $21.00 to $21.50.

Compass Point noted, “WMC released quarterly earnings for the first time as a public company (IPO was May 15, 2012) and overall, results were ahead of expectations. Core EPS of $0.41 beat our EPS estimate of $0.36 for the initial stub investment period. Return expectations are tracking slightly ahead of our forward inputs (we estimate EPS of $3.22 in 2013 versus consenus of $3.13). With the ability to leverage the resources of their external manager, WMC is able to deliver results and remains largely insulated from many of the low probability high severity risks associated with investing in a newly formed levered MBS investment vehicle. In the agency mREIT space, WMC remains unique in that it has built a portfolio of assets capable of mitigating near term increases in prepayments, the dividend is growing and appears on track to surpass our initial expectations and yet the stock still trades at only a modest premium to book value. We reiterate our Buy rating and raising our price target to $21.50.”

Western Asset Mortgage Capital Corp. closed on Tuesday at $20.64.