Annaly Capital (NLY) Stock Forecast & Price Target

Annaly Capital Management has demonstrated a robust increase in its residential credit portfolio, which rose approximately 769 basis points to $7.0 billion, representing around 22% of equity, driven by a record quarterly purchase volume of $4 billion in the fourth quarter of 2024. The company's operational performance is highlighted by an annualized return on average equity of 14.27% and an expansion of the net investment spread to 147 basis points, benefiting from a decrease in the cost of funds and an increase in yields on earning assets. Furthermore, the agency-skewed portfolio and ability to capitalize on favorable investment opportunities position Annaly favorably for continued growth, with expectations for significantly increased volumes in 2025 compared to 2024.

Annaly Capital Management reported a book value per share of $19.15, reflecting a 2% decline from the previous quarter and falling short of the estimated $19.70, indicating potential weaknesses in the company's financial health. The core agency portfolio experienced a significant decrease, dropping by $1.9 billion to $70.6 billion, which comprises 59% of capital, thus highlighting concerns over coupon positioning and reduced liquidity that could impact future income generation. Additionally, the slightly lower economic leverage ratio of 5.5x coupled with the decline in total portfolio assets to $80.9 billion raises questions about the company's capital efficiency and long-term sustainability in a volatile market environment.