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On Monday, Jones Trading maintained its Buy rating on AG Mortgage Investment Trust (NYSE:MITT) shares and increased the price target to $8.50, up from the previous $8.00. The adjustment follows the company’s latest earnings release, where AG Mortgage Investment Trust reported Earnings Available for Distribution (EAD) of $0.18, which was below the Jones Trading estimate of $0.22 and the consensus of $0.20. However, the company’s GAAP EPS was $0.30, surpassing expectations due to net realized gains exceeding unrealized losses. Trading at a modest P/E ratio of 3.7x and offering a substantial 10.04% dividend yield, InvestingPro analysis suggests the stock is currently undervalued based on its Fair Value model.
Jones Trading’s analyst highlighted the company’s strategic focus, noting that AG Mortgage Investment Trust plans to continue emphasizing its non-agency platform. This strategy aligns with the firm’s intention to expand its home equity loan footprint. The analyst pointed out that as of December 31, AG Mortgage Investment Trust had a pipeline worth $101.3 million in this area. The market for home equity loans is estimated to be between $200 billion and $300 billion, indicating a significant growth opportunity for the company. With a strong current ratio of 8.11 and net income of $58.33 million in the last twelve months, the company appears well-positioned to execute its growth strategy. InvestingPro subscribers can access 8 additional key insights about MITT’s financial health and growth potential through the comprehensive Pro Research Report.
The earnings report suggests that while AG Mortgage Investment Trust fell short of some earnings expectations, its overall financial performance, particularly the higher GAAP EPS due to net gains, provided a basis for the analyst’s positive outlook and the raised price target. The company’s strategic direction, with an emphasis on the non-agency sector and home equity loans, appears to be a key factor in Jones Trading’s assessment. The stock is currently trading near its 52-week high of $7.95, reflecting growing investor confidence in the company’s strategy.
AG Mortgage Investment Trust’s focus on expanding its home equity loan business is a move to tap into a substantial market, with the current pipeline representing a fraction of the potential market size. The analyst’s remarks reflect an anticipation of growth in this sector, which could contribute to the company’s future performance.
Investors and market watchers will likely keep an eye on AG Mortgage Investment Trust’s progress in expanding its non-agency and home equity loan operations, as these initiatives could play a crucial role in the company’s ability to meet or exceed future earnings estimates and justify the upgraded price target.
In other recent news, AG Mortgage Investment Trust Inc . reported its fourth-quarter 2024 earnings, revealing a slight miss on both earnings per share (EPS) and revenue forecasts. The company posted an EPS of $0.18, falling short of analysts’ expectations of $0.20, while revenue came in at $18.01 million, below the forecasted $18.51 million. Despite these results, AG Mortgage’s stock rose in premarket trading. The company’s investment portfolio expanded by 13% to $6.7 billion, and the economic return on equity for the full year was reported at 11.7%. Looking ahead, AG Mortgage projects EPS growth, with forecasts of $0.25 for Q1 2025 and $0.29 by Q4 2025, alongside expected revenue increases. The company plans to deploy $75-100 million in capital for strategic investments. Analysts from firms like BTIG and Piper Sandler have shown interest in the company’s strategic direction, particularly in the non-QM and home equity markets.
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