Overview#
Shares of Fannie Mae and Freddie Mac, two major mortgage-finance companies, saw a decline in early trading on Friday. This drop followed a report from Wedbush analyst Henry Coffey, who adjusted his price targets for both companies, indicating that their anticipated release from government control may be postponed until after the upcoming midterm elections in November.
Analyst Downgrade#
Coffey has lowered his price target for Fannie Mae from $13 to $8 and for Freddie Mac from $13.35 to $12. He noted that with President Trump focusing on other issues and a lack of communication from the administration regarding the companies' potential initial public offerings (IPOs), any discussions about Fannie Mae and Freddie Mac are likely to be limited until after the elections. The only expected topic of discussion is the reduction of mortgage costs for homebuyers.
Scenarios for the Future#
The analyst outlined three potential scenarios regarding the future of these companies, particularly in light of growing concerns about housing affordability: 1. Doing Nothing: This scenario suggests a $0.00 value for both shares, indicating no changes or improvements. 2. Building Capital: This involves accumulating capital and potentially paying dividends on preferred shares in the next 7 to 10 years. 3. Converting Shares: This would mean considering senior preferred shares as paid and converting both types of preferred shares into common shares.
Market Reaction#
On Friday, Fannie Mae's shares fell by as much as 3.2%, while Freddie Mac's shares dropped by up to 2.6%. Since reaching a peak on September 11, both companies have seen their stock prices decline by over 60%. Initially, there was optimism regarding their potential IPOs, which had contributed to gains in 2025 for these mortgage-finance giants.