NLY: BTIG Sees 13% Economic Return in 2026 Despite Target Cut

BTIG lowered its price target on Annaly Capital Management (NLY) to $24 from $25. The firm kept its Buy rating. BTIG expects agency mortgage real estate investment trusts to generate an economic return of roughly 13% in 2026. Dividends should offset modest book-value declines, the analyst said.

CEO David Finkelstein reported an economic return of 1.5% for the first quarter. He attributed the result to the resilience and diversification of Annaly's housing finance platform despite a volatile market backdrop. Earnings available for distribution came in at $0.76 per share.

During the quarter, Annaly raised roughly $510 million in common equity through its at-the-market program. Most of that capital went toward Residential Credit and mortgage servicing rights. The share of capital in those businesses rose from 38% to 44% by quarter-end, Finkelstein said.

Finkelstein said the Agency portfolio had a market value of $92 billion at quarter-end, representing 56% of capital. Annaly repositioned the portfolio by reducing exposure to higher-coupon 6% securities and increasing its allocation to 4.5% to-be-announced securities.

On the loan side, Annaly acquired $6.7 billion in whole loans during the quarter and generated $7.4 billion in lock volume. That marked a 16% increase from the prior quarter and a 41% jump from the same period last year.

The OBX platform completed eight securitizations totaling $4.7 billion in the quarter. After quarter-end, four more securitizations priced, bringing the year-to-date total to 12 transactions with a combined value of $6.6 billion, Finkelstein said.

Annaly carries an Alpha Score of 64 out of 100 on its NLY stock page, reflecting a moderate outlook. BTIG's analysts said spreads remain attractive relative to history, supporting both book values and dividend prospects over the long term. The firm expects agency mREITs to generate an economic return of about 13% in 2026.