RBC Capital has raised its price target on AGNC Investment Corp (NASDAQ:AGNC) to $13.00 from $11.00 and maintained an Outperform recommendation on the mortgage real estate investment trust. The stock was trading near $12.02 at the time of the report, bringing it close to RBC’s new target and in line with an InvestingPro Fair Value estimate that indicates the shares are slightly undervalued.
RBC attributed the target increase to AGNC’s solid economic returns of 11.6% in the fourth quarter, which the firm said were driven by tightening spreads on mortgage-backed securities (MBS). The brokerage noted that spreads kept tightening after the quarter ended, with government-sponsored enterprises directed to purchase MBS. That sequence of developments has coincided with meaningful share-price appreciation: AGNC has returned 32.6% over the past six months and 41.7% over the past year, on a price basis.
RBC’s update also addressed the company’s income-generation profile. The firm said portfolio returns remain supportive of common dividends, while adding that forecasted returns are slightly below AGNC’s cost of capital. RBC amended its internal estimates to reflect the recent market movement and the company’s reported returns.
Independent data from InvestingPro cited in the report underscores AGNC’s dividend consistency: the company has paid dividends for 19 consecutive years and currently yields 11.98%.
In reaffirming the Outperform rating, RBC highlighted a favorable near-term outlook for agency MBS, the potential for any steepening in the yield curve to benefit the firm, and a dividend yield of roughly 12% that the brokerage described as above the peer group average. RBC’s revised $13.00 target represents roughly an 18% increase over its prior $11.00 target.
Separately, AGNC released fourth-quarter 2025 financial results that fell short of consensus expectations. The company reported diluted earnings per share of $0.35, below the $0.37 that analysts had anticipated. Revenue for the quarter came in at $908 million versus projected revenues of $940.76 million. The company did not report any mergers or acquisitions during the period, and analyst firms did not register any upgrades or downgrades in the immediate aftermath of the earnings release.
These earnings and revenue shortfalls illustrate the near-term challenges AGNC faced in matching market forecasts, even as its portfolio returns and MBS market dynamics supported dividend coverage and a stronger share price. Investors may be closely monitoring the continuing evolution of MBS spreads, GSE purchase activity, dividend sustainability, and how updated broker estimates reconcile rising market gains with the company’s cost of capital.
Key points
- RBC raised its AGNC price target to $13.00 from $11.00 and kept an Outperform rating, citing tightening MBS spreads and subsequent GSE purchases.
- AGNC reported a Q4 economic return of 11.6%, and the stock has gained 32.6% over six months and 41.7% over one year.
- Dividend profile remains strong; AGNC has paid dividends for 19 consecutive years and carries a current yield near 12%.
Risks and uncertainties
- Q4 2025 results missed estimates - EPS of $0.35 versus $0.37 expected and revenue of $908 million versus $940.76 million projected - highlighting execution or market-forecast risk for the period.
- RBC noted that expected portfolio returns are slightly lower than AGNC’s cost of capital, presenting a potential headwind to sustained excess returns and valuation stability.
- No analyst upgrades or downgrades were reported following the earnings release, leaving near-term sentiment shifts uncertain.
Sectors impacted
- Mortgage real estate investment trusts and financials exposed to agency MBS markets.
- Fixed-income markets, given the role of spreads and yield-curve movements on portfolio economics.