ARR Stock Forecast & Price Target

ARMOUR Residential REIT is demonstrating a positive trajectory with a notable increase in its exposure to futures, which rose approximately 25% since year-end. The company's economic net interest spread improved to 188 basis points in the first quarter, reflecting a 35 basis point increase from the previous quarter, supported by a rise in average interest income to 500 basis points. Additionally, the firm has successfully increased its allocation to higher coupon holdings, now comprising 71.0% of its portfolio, up from 64.3% at the end of the previous year, further enhancing its financial positioning.

ARMOUR Residential REIT reported 1Q25 core earnings of $0.86 per share, which fell short of both its own and consensus estimates, reflecting negative impacts from fair value decreases due to spread widening. Additionally, the potential for increased agency MBS purchases by the Federal Reserve could result in lower mortgage rates, thereby accelerating prepayments and adversely affecting reinvestment yields and earnings. Furthermore, the downward revision of the FY25 EPS estimate to $3.61 from $4.03 places it $0.73 above the current annualized dividend, indicating potential challenges in sustaining dividend payments relative to earnings growth.