On Wednesday, Angel Oak Mortgage Inc (NYSE: NYSE:AOMR) received a Buy rating from BTIG, with a price target set at $13.50.
To be sure, BTIG has initiated coverage on the company, citing its position as a prime avenue for investors to gain exposure to non-qualified mortgage lending.
The firm highlighted the potential for a 20% or more total return, emphasizing the stability of Angel Oak Mortgage's dividend. This confidence is supported by the fact that most of the company's assets are match-funded with securitized debt, which contributes to the dividend's reliability.
BTIG's outlook for Angel Oak Mortgage is positive, expecting valuation improvements and net asset value (NAV) growth. These expectations are based on the possibility of spread tightening in the company's back-book, which could be further facilitated by a reduction in interest rate volatility.
The analyst from BTIG underscored the relevance of non-qualified mortgage lending as a growing funding source for consumers and borrowers who have non-traditional financial circumstances. This niche market is seen as an opportunity for Angel Oak Mortgage to capitalize on.
The coverage initiation and the setting of the price target reflect BTIG's view of Angel Oak Mortgage's prospects in the non-qualified mortgage lending space and its potential to deliver substantial returns to investors.
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