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On Thursday, Citizens JMP analyst Chris Muller reaffirmed a Market Outperform rating on Seven Hills Realty Trust (NASDAQ:SEVN), a $196 million market cap real estate trust with an impressive 91.7% gross profit margin, maintaining a steady price target of $14.50. According to InvestingPro data, the company trades at a P/E ratio of 10. Muller’s evaluation followed SEVN’s fourth-quarter earnings report released Sunday, which disclosed a GAAP and distributable earnings per share (EPS) of $0.33. This figure aligned with the consensus estimate but fell short of Muller’s more optimistic projection of $0.36.
The company’s book value per share as of December 31 was reported at $18.07, with an adjusted book value accounting for CECL reserves at $18.67 per share. With a strong current ratio of 2.59, InvestingPro data shows the company maintains healthy liquidity with assets well exceeding short-term obligations. Muller indicated that a thorough analysis of SEVN’s financials would continue after reviewing the firm’s Form 10-K.
The $14.50 price target set by Citizens JMP is predicated on a 9.7% required yield on the annualized dividend of $1.40 and reflects 0.80 times the current book value per share. Muller suggested that reaching this target could yield a total potential return of approximately 20%, with a 9.6% price appreciation and an annual yield of 10.6%, based solely on the current dividend rate.
SEVN’s recent financial performance, specifically the matching of consensus EPS, reaffirms the current price target and rating. The company’s stable dividend also contributes to the potential for a significant total return for investors, as highlighted by Muller. The reaffirmation of the Market Outperform rating suggests confidence in SEVN’s capacity to achieve the set price target, providing a positive outlook for the stock’s future performance.
In other recent news, Seven Hills Realty Trust reported its fourth-quarter 2024 earnings, showing a slight miss on earnings per share (EPS) expectations. The company posted an EPS of $0.33, just below the anticipated $0.34, while revenue was $7.68 million, falling short of the forecasted $8.28 million. Despite these misses, the company declared a dividend of $0.35 per share, yielding an annualized return of 10.6%. The company expanded its loan commitments by 8% to $641 million, focusing on student housing and hospitality sectors, indicating a strategic shift away from office exposure.
Additionally, Seven Hills Realty Trust’s full-year distributable earnings reached $21.3 million, or $1.45 per share, with the company maintaining a conservative leverage ratio of 1.6x. The company’s strategic focus on diversified lending aligns with their future guidance, projecting Q1 2025 distributable earnings between $0.30 and $0.32 per share. Analysts from Jones Trading and Citizens JMP showed interest in the company’s leverage strategy and potential access to the CLO market, with management expressing confidence in maintaining dividend payouts. These developments reflect Seven Hills Realty Trust’s proactive approach to navigating a competitive lending environment.
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