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On Monday, Keefe, Bruyette & Woods adjusted their outlook on Federal Agricultural Mortgage Corp (NYSE:AGM), commonly known as Farmer Mac, with a reduction in the price target. The new target has been set at $215.00, down from the previous $230.00, while the firm maintained a Market Perform rating on the stock.
The adjustment by Keefe, Bruyette & Woods analyst Bose T. George comes with minimal changes to the earnings estimates for the upcoming years. The estimates for 2025, 2026, and 2027 are now $17.66, $19.65, and $20.90 respectively, slightly altered from the earlier projections of $17.63, $19.62, and $20.94. The revision reflects a slight increase in spread expectations to 116 basis points (bp) in 2025, 119 bp in 2026, and 118 bp in 2027, compared to the uniform 115 bp previously forecasted for each year. This change is attributed to management’s strategy of taking advantage of tighter credit spreads on the funding side in the first quarter, along with a shift towards business lines that offer higher spreads.
The rationale behind the lowered price target is tied to an adjusted price-to-earnings (P/E) multiple. The firm is now applying an approximately 11 times P/E multiple on the estimated earnings per share (EPS) for 2026, a decrease from the prior multiple of around 12 times. This modification is made to account for a "modestly higher level of political risk related to the potential impact of tariffs," as stated by the analyst.
Keefe, Bruyette & Woods’ stance on Farmer Mac remains at Market Perform, indicating that the stock is expected to perform in line with the broader market. The firm’s analysis suggests a cautious approach, considering the potential risks and the current economic environment Farmer Mac operates within.
In other recent news, Federal Agricultural Mortgage (AGM) reported its first-quarter 2025 financial results, surpassing analyst expectations with an earnings per share (EPS) of $4.19, compared to the forecast of $4.14. The company also exceeded revenue projections, posting $94.32 million against the anticipated $94.02 million. This performance highlights AGM’s consistent ability to outperform expectations, even in a challenging economic environment. The company achieved record quarterly revenue and core earnings, with notable growth in its broadband infrastructure and renewable energy segments. Additionally, AGM’s diversified revenue streams and disciplined asset liability management contributed to its robust financial performance. Analysts have positively received these results, reflecting strong investor confidence in AGM’s strategic initiatives and market opportunities. The company plans to continue its growth trajectory through farm securitization transactions, which are expected to enhance its funding strategy. Looking ahead, AGM maintains a positive outlook, supported by a strong pipeline for farm and ranch loan purchases in the upcoming quarters.
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