Fannie Mae "outperform," estimates reduced

09/22/04 - Wachovia Securities

NEW YORK, September 22 (newratings.com) - Analysts at Wachovia Securities maintain their "outperform" rating on Fannie Mae (FNM), while reducing their estimates for the company.

Fannie Mae provides financial services to the residential mortgage markets in the US.

According to Wachovia Securities' research note published yesterday, the Wall Street Journal has reported that the Office of Federal Enterprise Housing Oversight (OFHEO) has completed its investigation into Fannie Mae’s alleged accounting malpractice. News sources mention that OFHEO has found the company guilty of manipulating its reported performance, the analysts say.

Both Fannie Mae and the OFHEO have declined to comment on the outcome of the investigation, according to Wachovia Securities. The analysts believe that the company's share price would remain under pressure till the OFHEO discloses its findings. The company has reported weak mortgage volumes for August, the analysts add.

The EPS estimates for FY2004 and FY2005 have been reduced from $7.94 to $7.79 and from $8.80 to $8.50, respectively. The P/E estimates for FY2004 and FY2005 are 9.8x and 8.9x, respectively.

Wachovia Securities maintains its "outperform" rating on Fannie Mae.