Shares of AG Mortgage jumped 17.8% on Friday after the hybrid mortgage real estate investment trust (REIT) company reported higher-than-expected 1Q sales. Additionally, the company saw a significant increase in adjusted book value mainly driven by a recovery in asset values.
AG Mortgage’s (MITT) 4Q revenues of $24.45 million smashed the Street’s estimates of $12.01 million. However, its top-line was lower than the year-ago quarter’s revenues of $37.52 million.
Core earnings plunged 57.8% to $0.22 per share year-over-year. (See AG Mortgage stock analysis on TipRanks)
The company recorded a 28% year-on-year increase in its adjusted book value, mainly benefitting from a recovery in asset value and strong performance at its mortgage origination affiliate, Arc Home. In 2020, Arc Home registered a 136% year-over-year surge in origination volume.
Following the earnings release, KBW analyst Bose George upgraded the stock to Hold from Sell. George is impressed with AG Mortgage’s strong book value performance and remains optimistic about the company’s earnings potential. The analyst also raised the price target to $4 (1% downside potential) from $3.
Overall, the Street has a cautiously optimistic outlook on the stock, with a Moderate Sell consensus rating based on 1 Hold and 1 Sell. The average analyst price target of $3.25 implies downside potential of about 20% from current levels. Shares have lost nearly 75% in value over the past year.