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Fly News Breaks for December 6, 2019
Dec 6, 2019 | 08:40 EDT
B. Riley FBR analyst Randy Binner last night initiated coverage of Freddie Mac with a Neutral rating and $2.00 price target. The analyst increasingly expects to see the status quo maintained on the regulatory front ahead of the 2020 elections, but he also expects the prospect of government sponsored enterprise reform to be a significant market topic that could create trading volatility in GSE common and preferred shares. Freddie Mac's equity value has a range of potential outcomes, from 31c to $3.77, Binner tells investors in a research note, citing his analysis. The company has been positioning for privatization by reducing balance sheet exposure through risk transfer deals and by growing guarantee fee income, he adds. Binner views Freddie Mac common and preferred securities as a call option on a "large financial company that would likely thrive in a private market."
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