On Friday, Piper Sandler began coverage on AG Mortgage (NYSE:MITT) Investment Trust stock, listed on the New York Stock Exchange under the ticker NYSE:MITT, with an Overweight rating and a price target of $9.00. The firm's initiation of coverage is based on the expectation of significant earnings growth for the mortgage real estate investment trust (REIT) in the next two years.
The positive outlook for AG Mortgage Investment Trust is attributed to anticipated trends in net interest income, which are expected to increase. This prediction comes on the heels of the company's recent acquisition of Western Asset Mortgage (NYSE:WMC) Capital Corporation (WMC), which is believed to contribute to scale and operating efficiencies.
Piper Sandler forecasts an approximate 130% earnings growth for the REIT in 2024, followed by an additional 27% growth in 2025. These projections are underpinned by the assumption that the company will achieve return on equities (ROEs) in the low-teens by the end of 2025.
The firm's analysis suggests that the estimates might be on the conservative side. There is potential for more optimistic outcomes if AG Mortgage Investment Trust benefits from more favorable spreads in the securitization market, experiences improvements in funding costs as interest rates decline, and if the company successfully implements further share repurchases.
In other recent news, AG Mortgage Investment Trust (MITT) has reported significant developments. The company has announced its inclusion in the Russell 3000 Index starting July 2024, a move that reflects its successful growth initiatives and solid market position in the residential mortgage REIT sector.
In addition, AG Mortgage has priced a $65 million public offering of 9.500% senior notes due 2029, aiming to allocate the net proceeds to general corporate functions and potentially repaying existing debts.
On the earnings front, AG Mortgage reported a 5.5% economic return on equity for Q1 2024, with GAAP net income available to common shareholders of $16.3 million, or $0.55 per share. The company's adjusted book value increased from $10.20 to $10.58, demonstrating financial health and readiness for future acquisitions.
These are among the recent developments for AG Mortgage, a company that continues to make strategic moves to secure and enhance its market presence. As always, the company's robust liquidity and disciplined approach to growth and risk management remain key factors in its ongoing operations.
InvestingPro Insights
AG Mortgage Investment Trust (NYSE:MITT) stands out with a compelling valuation, trading at a low earnings multiple of just 3.93, according to recent InvestingPro data. This figure reflects a company priced attractively relative to its earnings, which could catch the eye of value-oriented investors. Additionally, the REIT's commitment to shareholder returns is evident through its substantial dividend yield of 10.28% as of the last twelve months leading up to Q1 2024, coupled with a history of maintaining dividend payments for an impressive 14 consecutive years.
Investors may also find reassurance in the company's solid financial health, as indicated by the fact that its liquid assets exceed short-term obligations. This could provide a buffer against market volatility, which is noteworthy considering the stock's price has been quite volatile. Moreover, the REIT has demonstrated a strong return over the last three months, with a price total return of 34.61%. This performance, alongside the analyst's positive projections and the recent strategic acquisition, paints a picture of a potentially robust investment opportunity.
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