shares continue to slide after being hit by analyst downgrades and reports that it may need to raise as much as $6 billion to operate its business.
A Goldman Sachs analyst cut his price target for the nation's second-largest purchaser of mortgage assets, behind its equally imperiled peer
Goldman's James Fotheringham said that Freddie's near-term liquidity pinch will significantly impinge the fair value of the government-sponsored entity's net assets. The analyst cut his price target for Freddie by a third to $24.
Analysts at a number of other firms also slashed price projections for the agency. Credit Suisse's Moshe Orenbuch cut his price target to $27 from $45 and Friedman Billings Ramsey analyst Paul Miller cut Freddie to $20 from $55.
Freddie has experienced a precipitous drop in its share value after posting on Tuesday
a third-quarter loss totaling about $2 billion and announcing that it would be forced to slash its fourth-quarter dividend by 50% and unload mortgage assets to shore up its capital position due to shakiness in the U.S. housing market. The news sent the quasi-governmental agency's stock plunging as much as 29% on Tuesday. Fannie Mae shares also shed nearly 25% to $28.25 on the news.
Analysts following the beleaguered company also have suggested that Freddie may need to raise as much as $6 billion to right its mortgage-buying ship.
The negative analyst projections on Wednesday recently sent Freddie's shares down 2.7% to $25.01. Fannie's shares were up fractionally.