UPDATE: Oppenheimer Lowers PT on JAVELIN Mortgage Investment Following Agency MBS Prices Drop

In a report published Wednesday, Oppenheimer analyst Terry McEvoy reiterated an Outperform rating on JAVELIN Mortgage Investment (NYSE: JMI), but lowered the price target from $21.00 to $19.00.

In the report, Oppenheimer noted, “One of the key risks to mortgage REIT investing is that mortgage-backed securities (MBS) price fluctuations can negatively impact book value in a rising interest rate environment. The recent increase in the 10-year Treasury yield and subsequent MBS price declines is a perfect example. JAVELIN's book value fell to $17.46 per share in early May, and based on our model, is now closer to $17. Shares of JMI have been under pressure since early May, reflecting a capital raise (priced at $19.30) followed by more broad-based selling of MREITS in reaction to estimated book value declines this quarter. However, while book value is down, the outlook for dividends has improved given the recent widening of spreads. We are modeling an FY13 dividend of $2.76.”

JAVELIN Mortgage Investment closed on Tuesday at $16.15.