Two Harbors price target lowered to $12.50 from $13.50 at JPMorgan

JPMorgan analyst Richard Shane lowered the firm’s price target on Two Harbors to $12.50 from $13.50 and keeps a Neutral rating on the shares as part of a Q1 preview for the mortgage real estate investment trust group. For commercial REITs, the prospect of higher for longer base rates exacerbates credit risk as borrowers’ rate caps expire and cap rates remain elevated, headwinds that will not be offset by potentially higher margins in the near-term, the analyst tells investors in a research note. For residential mortgage REITs, the firm sees a modestly positive outlook balancing near-term margin risk and potential book value appreciation.