Is This 12.6% New York Mortgage Stock Ready to Skyrocket?

Unlocking Potential: BlackRock’s 16.9% Stake in NYMT

Imagine a world where lower interest rates pave the way for financial stocks to thrive. Welcome to the landscape of New York Mortgage Trust Inc (NASDAQ:NYMT), where opportunity meets strategy!

So, what’s the scoop?

As a mortgage real estate investment trust (mREIT), New York Mortgage Trust operates by borrowing significant funds to fuel its ventures. Higher interest rates can pinch margins and profits, but lower rates? That’s when the real magic happens—affordable borrowing ignites lending opportunities!

In this favorable environment, New York Mortgage Trust Inc shines bright. Positioned in bustling markets like New York City, Los Angeles, and Charlotte, this mREIT is on a mission to acquire, invest in, finance, and manage a wealth of mortgage-related and financial assets.

With a robust $6.9 billion portfolio that’s credit-savvy and strategically diversified, New York Mortgage Trust is ready to weather any economic storm. They’ve cleverly focused on mortgage-related and single-family housing assets, balancing both credit risk and interest rate risk to optimize returns.

“Earnings Surge Ahead!”

Thanks to a savvy rotation in its portfolio towards acquisitions with steady revenue streams, New York Mortgage Trust has recently announced impressive third-quarter earnings that exceeded expectations!

For the quarter ending September 30, 2024, the mREIT reported an impressive net income of $0.36 per share—an incredible turnaround from a loss of $1.04 per share a year prior. Adjusted net income soared to $32.4 million, or $0.39 per share—up from just $0.12 in the previous year! They even outperformed Wall Street’s consensus of $0.06 per share!

Interest income skyrocketed by 66% to $108.4 million, translating to $1.20 per share, while net interest income increased by 20.2% to $20.2 million. Their book value per share rose to $9.83, with an adjusted book value of $10.87. Talk about momentum!

During this thriving quarter, New York Mortgage Trust made strategic moves by acquiring $1.0 billion in new investments, including:

• $372.0 million in agency RMBS
• $624.0 million in residential loans

Jason Serrano, the mREIT’s CEO, remarked, “With sharply higher earnings of $0.36 in the third quarter, we’re witnessing the fruits of a portfolio rotation that began over a year ago. Our focus on high-recurring interest income is paying off!”

Quarterly Dividend: A Steady $0.20/ Share

As a REIT, New York Mortgage Trust is committed to returning at least 90% of its taxable income to shareholders. Since its IPO in June 2004, it has declared a whopping $1.4 billion in dividends!

In September, the company announced a third-quarter dividend of $0.20 per share (or $0.80 annually)—translating to a fantastic forward yield of 12.68%. Now that’s what we call a compelling reward for investors!

67% Upside for NYMT Stock?

Despite facing headwinds in 2022 and 2023 due to rising interest rates, New York Mortgage Trust is now seeing a revival. With the Federal Reserve hinting at initial interest rate cuts, optimism is brewing, and mREITs are benefiting!

As of December 9, New York Mortgage stock has surged approximately 24% since its third-quarter report in late October. However, it’s still down 16% year-to-date, trading at $6.52 per share—significantly below its 52-week high of $8.61 from December 2023.

Here’s the silver lining: Wall Street analysts remain bullish, projecting the stock could exceed previous highs with a 12-month average target of $7.88—potentially soaring as high as $11.00! That spells exciting prospects for gains between 14% and 67%!

Chart courtesy of financial analytics

The Scoop on New York Mortgage Stock

New York Mortgage Trust Inc stands out as an mREIT with a dynamic portfolio of residential mortgage-backed assets, paired with solid balance sheet health and liquidity.

The recent third-quarter results reveal a remarkable rise in earnings to $0.36 per share, with adjusted earnings beating estimates at $0.39 per share. Both interest income and net interest income have experienced phenomenal double-digit growth!

Investors can take heart: this strong performance and strategic focus on high-revenue acquisitions have energized analyst projections, painting a bright future for New York Mortgage stockholders and the 225 institutions holding 59.11% of shares.

Among these notable investors, BlackRock Inc leads the pack with a commanding 16.9% stake (15.32 million shares), followed closely by Vanguard Group Inc at 6.8% (6.16 million shares).