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Nomura target to $20 Brief clip from the PDF.... Originations & Servicing Driving Growth – Raising TP to $20 - Reiterating Buy Rating Raising Target Price to $20: We raise our target price to $20 from $18.50, reflecting NRZ’s faster growth on its operating businesses, which outperformed in 4Q19, and has guided to outpace our previous expectations. While we have not fully incorporated a sum- of-parts analysis for NRZ, 2020 earnings guidance on its operating businesses of $220mn – $440mn supports a premium to reported book value of 1.2x. In addition, our model projects NRZ’s $0.50 quarterly dividend to be well covered by core earnings in 2020, resulting in yield compression for the stock, which we estimate to be ~10%. We note that yield compression is a theme we are forecasting for NRZ and the MREIT industry. As for NRZ, the company is seeing improved pricing on its new preferred equity offering, with its latest series C offering pricing at a 6.375% yield vs. 7.125% on its Series B. |
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