On Monday, B.Riley adjusted its price target for New York Mortgage Trust (NASDAQ:NYMT), reducing it to $11.00 from the previous $15.00, while maintaining a Buy rating on the stock.
The firm's analyst cited a model update as the reason for the price target change. The analyst believes the current 45% discount to the stock's adjusted book value of $12.54 is excessive. This view is based on the expectation that the Federal Reserve will start to lower interest rates by mid-2024, which is anticipated to bolster New York Mortgage Trust's earnings as it continues to rebuild its investment portfolio.
The analyst from B.Riley also noted that the adjusted book value of New York Mortgage Trust is expected to perform better in 2024, with asset-backed securities (ABS) and mortgage-backed securities (MBS) credit spreads having already tightened significantly year-to-date.
"Our long-term thesis on NYMT remains consistent; the company has been preserving cash and running with excess capital as it awaits a better investing entry point," said the analyst.
Furthermore, the analyst pointed out that New York Mortgage Trust has been increasingly investing in agency MBS and non-agency business-purpose loans (BPL), where returns on equity (ROEs) are high. The company's strategic approach to capital deployment in these areas is expected to continue to support its growth and earnings potential.
InvestingPro Insights
The latest from InvestingPro provides a deeper dive into New York Mortgage Trust's (NASDAQ:NYMT) financial health and market performance. With a current market capitalization of $634.08 million, the company is trading near its 52-week low, reflecting a potential opportunity for investors believing in the stock's recovery. Despite the stock's volatility, an InvestingPro Tip highlights that analysts have revised their earnings upwards for the upcoming period, indicating a positive sentiment about the company's earning potential.
Another key metric for investors to consider is the dividend yield, which stands at a substantial 11.51%, coupled with the fact that New York Mortgage Trust has maintained dividend payments for 21 consecutive years. This commitment to returning value to shareholders remains a cornerstone of its investment appeal, especially for income-focused investors. Additionally, the company's liquid assets exceed its short-term obligations, providing financial stability and flexibility.
On the earnings front, while the company was not profitable over the last twelve months, analysts predict that New York Mortgage Trust will be profitable this year, aligning with the sentiment that the Federal Reserve's potential interest rate adjustments could favor the company's earnings. For investors seeking more comprehensive analysis and tips, InvestingPro offers a total of 11 InvestingPro Tips for NYMT, which can be accessed at https://www.investing.com/pro/NYMT. To get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, use the coupon code PRONEWS24.
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