On Wednesday, Keefe, Bruyette & Woods adjusted its price target on shares of Apollo Commercial Real Estate Finance (NYSE:ARI), bringing it down to $10.00 from the previous $11.00. Despite the reduction, the firm has maintained a Market Perform rating on the stock.
The revision follows the company's recent announcement that its book value had decreased by 8% to $13.22. This decline was attributed to a $147 million, or $1.04 per share, Current Expected Credit Loss (CECL) provision related to the 111 West 57th Street project. The analyst noted that the drop in book value was somewhat anticipated due to the well-documented risks associated with the project.
However, it was also pointed out that aside from the specific provision for the 111 West 57th Street project, the credit performance of Apollo Commercial Real Estate Finance's portfolio remained stable.
In light of the day's market activity, the stock was trading at approximately 0.73 times its book value and offered a 14.5% yield, which is considered relatively attractive when compared to its peers. The peers are currently trading between 0.7 to 0.8 times their book value and have dividend yields ranging from 11% to 13%.
The Market Perform rating from Keefe, Bruyette & Woods indicates a neutral stance towards Apollo Commercial Real Estate Finance, reflecting a broader caution towards commercial real estate credit. Despite the cautious outlook, the analyst suggested that the stock's valuation was relatively appealing when measured against similar companies in the sector.
InvestingPro Insights
Following Keefe, Bruyette & Woods' recent price target adjustment for Apollo Commercial Real Estate Finance (NYSE:ARI), insights from InvestingPro offer a deeper dive into the company's financial metrics and future prospects. With a market capitalization of $1.4 billion and a noteworthy dividend yield of 14.54%, ARI stands as a significant player for income-focused investors. The stock's recent performance shows a one-week total return of -11.16%, reflecting the volatility that the market has observed.
InvestingPro Tips suggest that ARI's net income is expected to grow this year, a positive sign for investors looking for growth potential. Additionally, two analysts have revised their earnings upwards for the upcoming period, hinting at a more optimistic outlook for the company's financial performance. Moreover, with the stock being in oversold territory according to the RSI, there might be a potential for a rebound, which could be an opportunity for investors considering entry points.
For those seeking further analysis and tips, InvestingPro offers additional insights into Apollo Commercial Real Estate Finance's performance and future projections. Interested readers can unlock more InvestingPro Tips by using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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