Shares of Invesco Mortgage Capital (IVR -0.69%) could be about to lose one-third of their value, if a new evaluation of the company proves accurate. Bank of America (BAC -0.38%) Securities has initiated coverage of the real estate investment trust with a price target of only $2.50, well down from its current level of $3.74, and an underperform recommendation.

Invesco is a mortgage REIT (mREIT), meaning that instead of investing directly in real estate, its assets consist of the mortgages that pay for those properties.

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The shares of mREITs tend to be particularly volatile in times of economic duress or success, as they usually have very high leverage. This is because they must take on a great deal of debt in order to fund their many mortgage investments; they earn their money from the spread between the cost of this funding and the income they receive from those mortgages.

Since a mREIT's business is heavily dependent on the borrowers behind the mortgages, the recent economic slowdown engendered by the coronavirus outbreak is making investors nervous. After all, if scores of borrowers suddenly have difficulty paying their mortgages, mREITs are going to take a damaging hit. 

Also, in Invesco's case, Bank of America believes capital structure is a potential problem. In his research note analyst Derek Hewitt writes that this "is imbalanced given the relative level of preferred stock, increasing the risk of a dilutive capital raise, in our view." If the stock were to be hit with a significant level of dilution, it might drive the already low price down considerably.

Still, there seem to be plenty of Invesco bulls who feel differently about their company. On Tuesday, the company's shares outpaced the gains of the broader stock market, rising by nearly 4.8%.