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On Wednesday, JMP Securities affirmed their positive stance on Redwood Trust (NYSE:RWT), maintaining a Market Outperform rating and a price target of $8.00. The endorsement comes after a thorough review of the company’s third-quarter 2024 performance, current interest rate forecasts, and market conditions. Currently trading at $6.61, the stock has analyst targets ranging from $6.50 to $9.50, according to InvestingPro data. Analysts at JMP Securities have decided to keep their full-year Earnings Available for Distribution (EAD)/Core earnings per share estimates for 2024 and 2025 unchanged at $0.55 and $0.80, respectively. This forecast suggests a 45% year-over-year increase in EAD for the calendar year. InvestingPro data shows that Redwood Trust, with its impressive 30-year track record of consistent dividend payments, currently offers a substantial 10.89% dividend yield.
The maintained estimates by JMP Securities are consistent with the general expectations on Wall Street, where the consensus for Redwood Trust’s earnings per share stands at $0.56 for 2024 and $0.81 for 2025. The analysts have, however, adjusted their projection for the fourth quarter of 2024 to $0.16 per share, which is a decrease from the previously anticipated $0.19 and slightly below the Street consensus of $0.17. This revised estimate also represents a $0.02 drop from the $0.18 of EAD reported by Redwood Trust for the third quarter of 2024.
The company’s stock performance will be closely watched as the market responds to these projections and as Redwood Trust prepares to release its fourth-quarter 2024 results. With a market capitalization of $876 million and a P/E ratio of 12.07, investors will likely consider these metrics alongside earnings estimates as they evaluate the company’s potential growth and profitability in the coming year. InvestingPro subscribers have access to over 30 additional key metrics and insights about Redwood Trust, including detailed financial health scores and comprehensive valuation analysis.
In other recent news, Redwood Trust has announced a public offering of $90 million in senior notes, with a 9.125% interest rate, expected to close in 2025. The company plans to use the net proceeds for various corporate purposes, which may include funding its mortgage banking businesses, acquiring mortgage-backed securities, and repaying existing debts. On the financial front, Redwood Trust has disclosed preliminary financial results for the fourth quarter of 2024, indicating a decrease in book value per common share, primarily due to the impact of higher benchmark interest rates and credit-related valuation declines on bridge loans.
The company has also expanded its home equity platform, Aspire, to include alternative loan products to meet the growing demand for flexible financing solutions. In addition, Redwood Trust has refreshed the branding of its Sequoia jumbo loan platform, aiming for continued growth in 2025. Furthermore, the company has disclosed compensatory arrangements for its top executives, including CEO Christopher J. Abate, with year-end long-term equity compensation awards.
In analyst news, JPMorgan has downgraded Redwood Trust’s stock from Overweight to Neutral, lowering the price target to $7.00. The adjustment reflects concerns over increased long-term rates potentially slowing down the narrowing of discounts on the company’s securities portfolio and straining the credit performance of its residential investor loan portfolio. These are the recent developments in Redwood Trust’s operations and financial performance.
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