MFA Financial stock coverage initiated at Hold by Jones Trading

Investing.com - Jones Trading initiated coverage on MFA Financial Inc . (NYSE:MFA) with a Hold rating on Monday. According to InvestingPro data, the company currently trades near its Fair Value, with analysts maintaining a neutral consensus. The stock offers an impressive 14.8% dividend yield and has maintained dividend payments for 28 consecutive years.

The research firm cited MFA’s well-seasoned management team and diversified portfolio of mortgage-credit related investments, including non-QM residential loans, business purpose lending (BPL) investments, and legacy NPL/RPL assets alongside a growing agency MBS portfolio. The company maintains strong financial health with a current ratio of 38.19, indicating robust liquidity management.

Jones Trading highlighted MFA’s strategy of securing non-recourse securitization financing for portfolio assets as a factor that enhances return durability for the internally-managed mortgage REIT.

Despite being constructive on the company’s long-term outlook due to its trend of ROE generation, low recourse leverage, and prudent management over recent history, the firm expressed near-term concerns about possible credit issues.

These potential issues, specifically in the transitional BPL portfolio that Jones Trading estimates represents over 20% of equity exposure at risk, could result in an overhang on the stock in coming quarters due to earnings and book value pressure.

In other recent news, MFA Financial Inc. reported its Q1 2025 earnings, revealing a mixed performance. The company reported earnings per share (EPS) of $0.29, falling short of the anticipated $0.35, but achieved revenue of $81.9 million, surpassing the forecast of $70.3 million. Despite the revenue beat, the earnings miss highlighted ongoing challenges in managing profitability. The company declared an increased dividend of $0.36 per share, reflecting confidence in its earnings potential. Additionally, net interest income grew to $57.5 million, contributing to the revenue growth. Analyst firms did not provide any recent upgrades or downgrades for MFA Financial. The company anticipates continued volatility in distributable earnings but remains optimistic about its diversified portfolio. MFA Financial’s strategic focus includes expanding its Non-QM and business purpose lending markets, as well as its agency MBS portfolio.

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