UPDATE: Deutsche Bank Initiates Coverage on Ellington Residential with a Hold Rating

In a report published on Tuesday, Deutsche Bank analyst Stephen Laws initiated coverage on Ellington Residential (NYSE: EARN) with a Hold rating and a $19.75 price target.

In the report, Deutsche Bank stated that, "We expect ROEs to expand in ‘13 given our expectations of an increase in non- agency MBS mix by YE. With financing costs tied to LIBOR rates and low swap rates, we expect EARN to benefit from low financing costs. Given our assumptions, we expect the portfolio to generate gross ROEs of 14-15% and net ROEs of roughly 11-12% in 2013; however, we will adjust our estimates once portfolio details are provided after the deployment of the IPO proceeds."

Ellington Residential closed on Friday at $19.85