Fannie Mae Shares Surge as Analyst Forecasts Monumental Turnaround

A dramatic reversal from Wall Street firm Wedbush Securities has sent shockwaves through the market, with the analyst more than decupling its price target for mortgage giant Fannie Mae. This bold move raises a critical question: is the company, after 17 years under government control, finally on the cusp of liberation, or is this merely political maneuvering?

In an exceptionally rare double-upgrade, Wedbush analyst Henry Coffey shifted his rating on Fannie Mae directly from "Underperform" to "Outperform." The new price target of $11.50—a massive leap from the previous $1.00—represents a direct challenge to market pessimists. This isn't based on fleeting optimism but is a calculated bet on concrete plans emerging from the Trump Administration.

The core of this bullish outlook hinges on the government's stated intention to terminate its conservatorship and monetize the Treasury Department's investments. Coffey explicitly references proposals to sell approximately five percent of the Treasury's stock options. Such a move would mark the first tangible step in ending the 17-year-long conservatorship that has heavily restricted the company's operational flexibility.

Wedbush outlines clear catalysts that could propel the stock:
* A corporate recapitalization to optimize the capital structure
* A substantial increase in shareholder value upon returning to private ownership
* A significant reduction in regulatory burdens, granting greater operational freedom

Should investors sell immediately? Or is it worth buying Fannie Mae?

Strong Fundamentals and Influential Backing

Is there a fundamental basis for this optimism? Operationally, the mortgage titan is already delivering solid performance. In the third quarter, net income climbed 16 percent to $3.9 billion, boosting the company's equity to a formidable $105.5 billion. With a guarantee book of $4.1 trillion and consistent fee revenue, Fannie Mae rests on a sturdy financial foundation.

This strength has not gone unnoticed by prominent investors. Bill Ackman's Pershing Square Capital Management holds a position of approximately 115 million shares and has been a vocal advocate for privatization for years. Ackman's patience is already being rewarded; this single position reportedly generated nearly $2 billion in gains for his fund in 2025 alone. Is the billionaire investor positioned for a final, lucrative payoff?

Reasons for Market Caution

Despite the euphoria from Wedbush, the broader market remains cautious. Other analysts are largely maintaining their "Hold" ratings for now, underscoring the prevailing uncertainty. The technical chart picture also advises prudence. The stock is currently trading below its key 50- and 200-day moving averages, a pattern that technically suggests persistent selling pressure.

Furthermore, the equity exhibits extreme volatility, reflected in a high beta of 1.94. Investors require strong conviction to hold through the uncertainty of whether political promises will translate into actionable policy. The critical question remains: will the stock successfully break out of its technical downtrend, or will the path to privatization once again become mired in bureaucratic gridlock?