Two Harbors Investment Corp.

Two Harbors Investment Corp. (NYSE: TWO) is a real estate investment trust that invests in real estate (REIT). Agency residential mortgage-backed securities (Agency RMBS), mortgage servicing rights (MSR), and other financial assets are the Company's primary focus. Its long-term investment goal is to provide a risk-adjusted total return to its stockholders, primarily through dividends and capital appreciation.

Key Highlights

• The company reported YoY decline of 10.97% in net interest income to USD 12.85 million in Q4FY21 (ended December 31, 2021) compared to USD 22.64 million in Q4FY20.
• TWO reported net loss of USD 15.04 million in Q4FY21 vs. a net profit of USD 192.22 million in Q4FY20.
• As of December 31, 2021, the company had cash and cash equivalents of USD 1.15 billion and total debt of USD 8.90 billion.
• TWO’s net margin for Q4FY21 was -2.3%, significantly lower than the industry median of 37.4%.
• Stock is currently trading below its crucial short-term (50-day) and long-term (200-day) SMA support levels, a bearish indicator.
• The stock is leaning towards the lower end of its 52-week range of USD 4.77 to USD 8.15.

Conclusion: Considering the decline in fundamentals, technical indicators, and associated risks, we recommend a "Watch" rating on the stock at the current price of USD 5.375, up 1.42%, as of March 22, 2022, at 12:24 PM PDT.

Technical Price Chart (as of March 22, 2022, at 12:24 PM PDT). Source: REFINITIV, Analysis by Kalkine Group

Technical Analysis Summary:

*Current price as of March 22, 2022, at 12:24 PM PDT.

Investors can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario.

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

Note 1: The reference data in this report has been partly sourced from REFINITIV.  

Note 2: Investment decision should be made depending on the investors' appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the valuation has been achieved and subject to the factors discussed above.