JPMorgan analyst Richard Shane lowered the firm’s price target on Arbor Realty to $11.50 from $12 and keeps an Underweight rating on the shares as part of Q2 preview for the mortgage real estate investment trusts. The firm sees a positive outlook for the residential mortgage REITs, saying recent economic data buttresses the case for rate cuts, which will reduce pressure on net interest margin. It sees potential book value appreciation as the Federal Reserve shifts. For commercial mortgage REITs, the analyst has a cautious outlook, saying risk still outweighs value. JPMorgan remains cautious on commercial real estate credit, forecasting higher charge-offs and reserve rates across the board.
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