On Wednesday, JPMorgan (NYSE:JPM) adjusted its outlook on shares of Blackstone Mortgage Trust (NYSE:BXMT), reducing its price target to $17.00 from the previous $17.50, while keeping a Neutral stance on the stock.
The adjustment followed Blackstone (NYSE:BX) Mortgage Trust's report of distributable earnings per share (EPS) of $0.49, which surpassed both JPMorgan's estimate of $0.44 and the consensus estimate of $0.46. Despite this, the company experienced $12.5 million in realized losses in the second quarter of 2024.
Blackstone Mortgage Trust's GAAP diluted EPS showed a loss of $0.32, falling short of JPMorgan's expectation of $0.53, primarily due to a higher-than-anticipated provision expense. Moreover, the trust has announced a reduction in its third-quarter 2024 dividend, lowering it to $0.47 from $0.62.
This change in dividend is both more significant and earlier than JPMorgan's anticipated reduction to $0.50 per quarter starting in the first quarter of 2025.
The book value per share of Blackstone Mortgage Trust also witnessed a decline quarter over quarter to $22.90 from $23.83. This figure stands below JPMorgan's estimate of $23.71 and the consensus estimate of $23.63. In light of these developments, JPMorgan has revised its December 2025 price target, basing it on 0.75 times its year-end 2025 book value per share estimate of $22.75, which implies an 8.5% annualized total return.
In other recent news, Blackstone Mortgage Trust has reduced its quarterly dividend by 24%, reflecting challenges from prolonged vacancies in office spaces. The company also reported a quarterly loss of $61.06 million but anticipates earnings growth from resolving loans. In response to these developments, Blackstone has authorized a $150 million stock repurchase program.
The firm's decision comes as the commercial real estate sector faces potential downfall, with a significant portion of the $4.7 trillion in outstanding commercial mortgages maturing in 2024. Analysts from Trepp and BTIG have commented on these developments, noting the company's resilience despite the challenging economic climate and its competitive edge as the world's largest global real estate investment platform.
Wolfe Research recently initiated coverage of Blackstone with a Peer Perform rating, highlighting the company's substantial net loan exposure. This comes as the U.S. office loan delinquency rate increased in June, a trend attributed to increased office vacancies and higher interest rates. Despite these challenges, Blackstone continues to actively manage its portfolio, as evidenced by its recent commitment of a $69 million senior loan to a resort hotel.
InvestingPro Insights
As investors consider JPMorgan's revised outlook on Blackstone Mortgage Trust (NYSE:BXMT), incorporating real-time metrics can provide a broader perspective on the company's financial health.
According to InvestingPro data, Blackstone Mortgage Trust has a market capitalization of approximately $3.12 billion, and despite a challenging environment, it has maintained a robust dividend yield of 12.63% as of mid-2024. This commitment to returning capital to shareholders is further evidenced by the company's track record of 13 consecutive years of dividend payments, a testament to its financial resilience.
While the company's price-to-earnings (P/E) ratio stands at a high 610, it's essential to note that analysts predict Blackstone Mortgage Trust will remain profitable this year. Moreover, the company's stock price is trading near its 52-week low, which may present an opportunity for long-term investors considering the firm's history of profitability over the last twelve months.
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