UPDATE: Deutsche Bank Initiates Coverage on Ellington Residential Mortgage With Hold Rating, $19.75 PT on Valuation

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

In the report, Deutsche Bank noted, “We expect EARN to generate low double digit ROEs due to attractive portfolio spreads on new investments. While the portfolio is primarily agency MBS, we expect the mix of non-agency MBS to increase in 2H13 and 2014. However, given the current portfolio mix, we are establishing a target of $19.75 per share based on shares trading at 100% of estimated post-IPO BV, which is at the high end of our valuation range for agency MBS managers. Given the valuation relative to our target, we are initiating with a Hold rating.”

Ellington Residential Mortgage closed on Friday at $19.85.