Shares of Two Harbors Investment Corp. (TWO) dropped 3.4% each in Monday’s extended trade and at the time of writing after the company announced the commencement of an underwritten public offering of its 30 million shares of common stock.
The real estate investment trust is focused on investing in, financing and managing Agency residential mortgage-backed securities (Agency RMBS), mortgage servicing rights and other financial assets. (See Two Harbors stock chart on TipRanks)
The company seeks to utilize the net proceeds from the sale of shares to acquire its target assets, including residential mortgage-backed securities, mortgage servicing rights and other financial assets.
Notably, Two Harbors seeks to grant underwriters a 30-day option to purchase up to an additional 4.5 million shares. Joint book-running managers for the offering are Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC and RBC Capital Markets, LLC.
Last month, JMP Securities analyst Trevor Cranston maintained a Buy rating on the stock with a price target of $7 (7.2% upside potential from current levels).
Cranston expects the company to report a net loss of $0.48 per share for the third quarter of 2021.
The rest of the Street is cautiously optimistic about the stock and has a Moderate Buy consensus rating based on 2 Buys and 1 Hold. The average Two Harbors price target of $7.25 implies 11.1% upside potential from current levels.
According to TipRanks’ Smart Score rating system, Two Harbors gets a 6 out of 10, which indicates that the stock is likely to perform in line with market averages.