On Thursday, Piper Sandler adjusted its price target for PennyMac Mortgage (NYSE:PMT) Investment Trust (NYSE:PMT), raising it to $15.00 from the previous $14.50, while maintaining a Neutral rating on the stock. The adjustment follows the company's first-quarter earnings for 2024.
PennyMac Mortgage reported higher than anticipated GAAP earnings per share (EPS) of $0.39, surpassing the analyst's estimate of $0.28. This increase was attributed to greater than expected Credit Risk Transfer (CRT) gains and an uptick in correspondent production revenue. However, these gains were partially offset by net fair value declines in strategies sensitive to interest rates.
Despite the positive GAAP EPS, the Operating EPS for PennyMac Mortgage came in at $0.20, which was below the estimated $0.34. This shortfall was due to lower than expected net interest income (NII) and servicing revenue. Additionally, the company experienced a slight decline in book value.
The management of PennyMac Mortgage anticipates an improvement in trends, estimating the current operating run rate for EPS to be closer to $0.35. However, this figure still falls short of the company's quarterly dividend of $0.40. Based on these insights, Piper Sandler suggests that PennyMac Mortgage is trading close to fair value at 0.9 times Price to Tangible Book Value (P/TBV) while yielding an operating return on tangible equity (ROTE) of less than 10%.
InvestingPro Insights
PennyMac Mortgage Investment Trust 's (NYSE:PMT) recent earnings report has drawn attention from analysts and investors alike. In light of Piper Sandler's updated price target, InvestingPro provides additional insights that may be valuable for those closely monitoring PMT's performance. With a current market capitalization of $1.27 billion and an attractive P/E ratio of 8.78, the company stands out in the financial sector. Notably, PMT has demonstrated a significant revenue growth of 97.5% over the last twelve months as of Q1 2024, signaling a robust expansion in its operations.
InvestingPro Tips highlight that analysts have revised their earnings upwards for the upcoming period, which aligns with Piper Sandler's assessment. Additionally, PMT offers a substantial dividend yield of 10.96%, rewarding shareholders and marking 15 consecutive years of dividend payments. However, it's crucial to consider that analysts anticipate a sales decline in the current year and expect net income to drop as well.
Investors interested in deeper analysis can find more InvestingPro Tips for PMT at https://www.investing.com/pro/PMT. To enhance your investment strategy with these insights, use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. There are 5 more InvestingPro Tips available that could provide further guidance on PMT's financial health and future prospects.
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