UBS Downgrades Two Harbors (TWO) to Neutral Amid $1.3B UWMC Acquisition
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 6d ago
0mins
Source: seekingalpha
- Rating Change: UBS analyst Doug Harter downgraded Two Harbors Investment (TWO) from Buy to Neutral, reflecting a cautious stance regarding the upcoming ~$1.3B all-stock acquisition deal.
- Deal Dynamics Impact: Harter noted that until the deal closes, TWO shares will primarily trade on deal dynamics rather than fundamentals, indicating market uncertainty surrounding the acquisition.
- Stock Performance: Since the merger announcement in mid-December, TWO's stock has surged 21%, significantly outperforming the S&P 500's 2.9% gain, suggesting a positive market reaction to the deal.
- Market Consensus: UBS's Neutral rating aligns with the average Wall Street analyst rating of Hold but diverges from the average SA analyst rating of Buy, reflecting differing views on the transaction's implications.
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Analyst Views on TWO
Wall Street analysts forecast TWO stock price to fall over the next 12 months. According to Wall Street analysts, the average 1-year price target for TWO is 10.88 USD with a low forecast of 10.00 USD and a high forecast of 12.50 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
5 Analyst Rating
1 Buy
4 Hold
0 Sell
Hold
Current: 13.290
Low
10.00
Averages
10.88
High
12.50
Current: 13.290
Low
10.00
Averages
10.88
High
12.50
About TWO
Two Harbors Investment Corp. is a real estate investment trust (REIT) that invests in mortgage servicing rights (MSR), residential mortgage-backed securities and other financial assets. The Company, through its operational platform, RoundPoint Mortgage Servicing LLC, is a servicer of conventional loans. The Company, through its subsidiary, TH MSR Holdings LLC, holds the requisite approvals from Fannie Mae and Freddie Mac to own and manage MSR. Its Agency residential mortgage-backed securities portfolio is comprised of fixed rate mortgage-backed securities backed by single-family and multi-family mortgage loans. Its other assets may include financial and mortgage-related assets other than its target assets, including non-Agency securities (securities that are not issued or guaranteed by Ginnie Mae, Fannie Mae or Freddie Mac), other Agency securities and certain non-hedging transactions that may produce non-qualifying income for purposes of REIT gross income tests.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Investigation of Investor Rights Announced
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- Sale Rights Notification: Two Harbors Investment Corp. is selling to UWM Holdings Corporation for 2.3328 shares of UWM Class A Common Stock per share of Two Harbors common stock, prompting Halper Sadeh LLC to encourage shareholders to understand their legal rights and options to ensure transaction fairness.
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Two Harbors Investment Corp. to be sold to UWM Holdings, shareholders to receive 2.3328 shares per share
- Investigation Launched: Former Louisiana Attorney General Charles C. Foti and his law firm Kahn Swick & Foti are investigating the proposed sale of Two Harbors Investment Corp. to UWM Holdings to assess the adequacy of the transaction process.
- Shareholder Compensation Analysis: Under the proposed terms, shareholders of Two Harbors will receive 2.3328 shares of UWM Class A Common Stock for each share they own, with KSF evaluating whether this compensation undervalues the company.
- Legal Rights Consultation: KSF encourages shareholders who believe the transaction undervalues the company to reach out for legal consultation, ensuring they are informed of their rights and options regarding the sale.
- Firm Background: Kahn Swick & Foti, led by a former Louisiana Attorney General, is dedicated to protecting investor rights and ensuring transparency and fairness in corporate transactions.
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