On Monday, Piper Sandler maintained its Overweight rating on AG Mortgage (NYSE:MITT) Investment Trust (NYSE:MITT) with a steady price target of $9.00. The firm's stance comes with an adjusted forecast for the company's third-quarter 2024 earnings per share (EPS).
The anticipated operating EPS has been raised to $0.20, up from a previous estimate of $0.19, due to expectations of increased net interest income and a potential expansion in net interest margin (NIM). This adjustment is attributed to lower funding costs and the retention of higher fixed rate securitizations on the company's balance sheet.
Furthermore, Piper Sandler has increased its third-quarter 2024 GAAP EPS projection for AG Mortgage to $0.34 from $0.15. This significant revision is based on the expectation of unrealized mark-to-market gains in the investment portfolio, influenced by recent movements in interest rates. The $9 price target is derived from a valuation model, which includes 90% of the estimated tangible book value (TBV) for the second quarter of 2025 and a 10% dividend yield, with an 80/20 weighting applied to these factors.
The firm also outlined several risks that could impact AG Mortgage's performance, including interest rate volatility, competition within the industry, liquidity risk, credit risk, and potential regulatory and compliance challenges. These factors are considered critical in assessing the trust's future financial health and market position.
AG Mortgage Investment Trust specializes in a range of real estate-related investments, and its performance is closely tied to the dynamics of the housing market, interest rates, and regulatory environment. Piper Sandler's updated estimates and maintained price target reflect the firm's ongoing analysis of these variables as they relate to AG Mortgage's financial outlook.
In other recent news, AG Mortgage Investment Trust reported its financial results for Q2 2024, indicating a slight decrease in adjusted book value per share to $10.37 from $10.58. The company registered $17.4 million of net interest income, alongside a GAAP net loss of approximately $700,000 or $0.02 per share. Despite a challenging quarter, the dividend was increased by 5.6% to $0.19 per share, and the loan portfolio delinquency rate remained low at 1%.
These recent developments also include the issuance of $65 million of investment-grade senior unsecured notes and maintenance of $180 million of liquidity. The company's total investment portfolio grew by approximately 11% to $6.9 billion. In addition, AG Mortgage Investment Trust was included in the Russell 2000 index.
Analysts noted that the company has not yet produced a traditional high book value and there has been a slight widening in their assets. On the positive side, they pointed out opportunities in the agency eligible market, non-QM space, and home equity space.
Management expressed focus on avoiding cash drag, generating a return on equity, and plans to return to its previous leverage level in the agency RMBS portfolio in the next quarter.
InvestingPro Insights
Adding to Piper Sandler's optimistic outlook, recent data from InvestingPro provides further context to AG Mortgage Investment Trust's (NYSE:MITT) financial position and market performance. The company's P/E ratio of 4.63 suggests it's trading at a low earnings multiple, which aligns with one of the InvestingPro Tips. This could indicate potential value for investors, especially considering the firm's maintained Overweight rating.
MITT's dividend yield stands at an impressive 10.51%, supporting another InvestingPro Tip that the company pays a significant dividend to shareholders. This high yield may be particularly attractive to income-focused investors in the current market environment.
The company's stock has shown strong performance, with a 55.37% price total return over the past year. This substantial gain correlates with the InvestingPro Tip highlighting MITT's high return over the last year, potentially reflecting market confidence in the company's strategy and management.
For investors seeking more comprehensive analysis, InvestingPro offers additional tips and insights. Currently, there are 11 more InvestingPro Tips available for MITT, providing a deeper understanding of the company's financial health and market position.
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