On Tuesday, Dynex Capital's stock (NYSE:DX) had its price target lowered by Keefe, Bruyette & Woods from $13.50 to $12.25, while the firm kept its Outperform rating on the shares. The adjustment comes after the company reported a miss in its first-quarter earnings. The firm has revised its full-year 2024 earnings available for distribution (EAD) estimates to a loss of $0.47 per share from the previously estimated loss of $0.38 per share.
The management of Dynex Capital disclosed that the book value quarter-to-date has decreased by an additional 7%, standing at $12.26. This decline has been factored into the new price target, which now roughly equals 1x the quarter-to-date book value. Despite the downward revision in the price target and earnings estimates, Keefe, Bruyette & Woods remains optimistic about the stock's potential performance.
The firm's analyst noted that the 2025 earnings estimate remains unchanged at $0.10. The expectation for mid-teens economic returns is contingent upon the agency mortgage-backed securities (MBS) spreads staying at their current levels. This outlook suggests a confidence in the company's ability to navigate through the current market conditions and deliver on its economic return goals.
Dynex Capital, a real estate investment trust (REIT), specializes in mortgage-backed securities. The company's performance is closely tied to the real estate market and interest rate environment. The maintenance of the Outperform rating indicates that the analyst believes Dynex Capital's stock will perform better than the overall market or its sector in the near future, despite the recent adjustments to its financial projections.
InvestingPro Insights
Recent updates from InvestingPro reveal a nuanced picture of Dynex Capital's (NYSE:DX) financial standing. With a market capitalization of $677.63 million and a P/E ratio standing at 9.68, the company appears to be trading at a value that could be attractive to investors looking for lower valuation multiples in relation to near-term earnings growth. This aligns with one of the InvestingPro Tips noting that Dynex Capital is trading at a low P/E ratio relative to near-term earnings growth.
Additionally, the company's significant dividend yield of 13.61% as of the latest data, coupled with its track record of maintaining dividend payments for 17 consecutive years, provides an appealing aspect for income-focused investors. This is particularly relevant in light of the InvestingPro Tip highlighting the company's consistent dividend payments. However, investors should also be aware of the potential challenges ahead, as analysts expect a drop in net income this year, and short-term obligations currently exceed liquid assets.
For those considering an investment in Dynex Capital, there are 7 additional InvestingPro Tips available, which could further inform investment decisions. These insights are accessible through an InvestingPro subscription, and readers of this article can take advantage of a special offer using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.