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On Monday, Raymond (NSE:RYMD) James affirmed its Outperform rating on Granite Point Mortgage Trust (NYSE:GPMT) with a consistent price target of $4.00, representing a 43% upside from the current price of $2.79. The firm’s analysts highlighted the company’s fourth-quarter performance and insights from the annual 10-K report. While Granite Point’s distributable earnings, excluding losses, fell short of expectations, the overall financial results were influenced by increased CECL reserve expenses. InvestingPro analysis indicates a Weak overall financial health score, though the company maintains strong liquidity with a current ratio of 3.35x. Analysts at Raymond James anticipate the company’s immediate attention will be directed towards resolving watch list loans, with expectations for new investment activities to pick up in the second half of 2025.
The firm has adjusted its estimates to account for Granite Point’s reduced portfolio size at year-end and has adopted more conservative assumptions for portfolio growth. Despite anticipating that near-term portfolio returns may suffer due to non-accrual loans, Raymond James believes the current stock valuation justifies their Outperform rating. According to the firm, the stock is trading at approximately 33% of its book value, which seems to excessively factor in credit concerns of the portfolio while not fully recognizing the potential earnings once non-accrual assets are settled. InvestingPro data confirms this deep discount, showing a price-to-book ratio of just 0.22x, while also highlighting a notable 7.17% dividend yield for income-focused investors.
Raymond James’ maintained price target of $4 per share suggests a significant potential for appreciation from the current trading levels. The firm’s stance is based on the unpredictability associated with the resolution of loans on the watch list, which affects the timing and extent of potential earnings recovery. Despite the near-term challenges, Raymond James stands by its rating, considering the valuation and prospective earnings once the company resolves its non-accrual assets. For deeper insights into GPMT’s valuation and financial health metrics, investors can access the comprehensive Pro Research Report available on InvestingPro, which includes detailed analysis of the company’s risk factors and growth potential.
In other recent news, Granite Point Mortgage Trust has received a reaffirmed Outperform rating from Raymond James, with a steady price target of $4.00. This decision follows a company update that revealed the fourth-quarter dividend remained consistent with prior quarters, aligning with market expectations. The update also highlighted the resolution of three watch list loans in the fourth quarter, with an additional three expected to be addressed soon. Notably, Granite Point repurchased 1.2 million shares during this period. The analyst at Raymond James, Stephen Laws, noted that the current valuation of Granite Point stock excessively factors in potential credit issues and undervalues the prospective earnings once non-accrual assets are resolved. The reaffirmed rating suggests confidence in Granite Point’s management and its ability to handle its portfolio effectively. Investors may monitor the resolution of watch list loans and share repurchases, as these actions could influence the company’s financial health and future earnings potential.
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