Lehman Boosts Fannie, Freddie

Analysts at Lehman Brothers (LEH: 0.00 N/A) on Tuesday upgraded both Fannie Mae (FNM: 1.13 0.00%) and Freddie Mac (FRE: 1.33 0.00%), moving both GSEs to “overweight” from a previous rating of “equal weight” on an expected recovery in revenue growth. The upgrades were originally reported by MarketWatch.

The news service reported that Lehman analysts met with each company and felt that the GSEs have “reached an important inflection point.” From the report:

The upgrades reflect political standing, ability to deploy capital and high-return investment options which have all improved “significantly” in recent weeks … “Prior to that the stocks should gradually outperform on steady market share gains and high returns on new business, which is sustainable while credit costs escalate.”