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Investing.com - Keefe, Bruyette & Woods maintained its Outperform rating and $95.00 price target on Walker & Dunlop (NYSE:WD) despite recent stock weakness.
Walker & Dunlop shares have declined 3% recently, underperforming commercial real estate brokers which fell 0.5% and commercial mortgage REITs which dropped 1.5% during the same period.
The investment firm attributed the weakness potentially to the 0.04% increase in the 10-year Treasury yield, noting that Walker & Dunlop is more rate-sensitive than peers, with the net present value of servicing decreasing by 0.5% for every 5 basis points of rate increase.
Another factor potentially affecting the stock was an industry article published on July 4 highlighting Freddie Mac (OTC:FMCC) multifamily layoffs, which could impact companies operating in the multifamily financing space.
Despite recent pressure, Keefe, Bruyette & Woods views Walker & Dunlop as attractively valued at 15.3 times estimated 2025 earnings and 12.7 times estimated 2026 earnings, compared to commercial real estate brokers trading at 17.8 times and 14.3 times, respectively.
In other recent news, Walker & Dunlop reported its first-quarter 2025 earnings, exceeding analyst expectations with an adjusted core earnings per share of $0.85, above the forecasted $0.78. However, the company faced a slight revenue shortfall, reporting $237.4 million compared to the anticipated $260.43 million. Despite this, Walker & Dunlop demonstrated a 4% year-over-year revenue growth, with a total transaction volume of $7 billion, marking a 10% increase from the previous year. The company’s strategic expansions, including entering the hospitality investment sales space, contributed to its robust performance, with the multifamily sector accounting for 88% of the quarter’s volume.
Additionally, Walker & Dunlop recently secured $170 million in refinancing for the Post District in Salt Lake City, facilitated through Fannie Mae (OTC:FNMA)’s near-stabilization program. Keefe, Bruyette & Woods maintained an Outperform rating on Walker & Dunlop with a price target of $95.00, noting that recent competitive strategies by Fannie Mae and Freddie Mac could be beneficial for the company. The firm highlighted the positive momentum in government-sponsored enterprise volumes, which is particularly favorable for Walker & Dunlop. These developments underscore Walker & Dunlop’s strategic focus on investment management and its ability to navigate market dynamics effectively.
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