KBW Maintains Sell Rating on Ready Capital with $3.75 Price Target

KBW analyst Jade Rahmani reaffirmed a Sell rating on Ready Capital with a price target of $3.75, citing concerns about the company's financial performance. The analyst consensus on Ready Capital is a Hold with an average price target of $4.44. The stock's market cap is $621.2M and has a P/E ratio of -1.99.

Ready Capital Corporation (NYSE: RC) released its second quarter 2025 financial results presentation, revealing a net loss from continuing operations of $0.31 per common share, a significant deterioration from the previous quarter's $0.09 loss per share [1]. The stock closed at $4.23 on August 7, 2025, near its 52-week low of $3.93, reflecting ongoing investor concerns about the company’s performance trajectory.

The company's total loan portfolio stood at $7.9 billion, with new loan originations of $532.1 million offset by loan repayments and sales of $774.7 million during the quarter. Core delinquencies (60+ days) increased to 4.6%, continuing the negative trend from previous quarters. Book value per share declined slightly to $10.44 from $10.61 in Q1 2025.

A key focus of Ready Capital’s strategy is the repositioning of its portfolio, particularly the divestiture of non-performing and non-core assets. The company completed its first bulk sale of legacy bridge loans after the quarter end, selling $494 million of multi-family bridge assets and generating net proceeds of $85 million on August 6, 2025 [1].

The company’s CRE portfolio review reveals the stark contrast between core and non-core assets. While the core portfolio maintains a relatively healthy 4.6% delinquency rate, the non-core portfolio is experiencing severe stress with a 48.2% delinquency rate. The Portland mixed-use asset, which Ready Capital acquired through a consensual deed-in-lieu arrangement in July 2025, shows 100% delinquency [1].

Ready Capital's Small Business Lending portfolio demonstrates significantly better credit metrics compared to the CRE portfolio, with a delinquency rate of just 2.8% and strong yields of 9.1%. The segment generated sales premiums ranging from 8.9% to 11.3% across different programs, indicating strong market demand for these assets [1].

Despite the challenging performance, Ready Capital has been actively managing its capital structure. The company repurchased 8.5 million shares at an average price of $4.41 during the quarter, which had a positive impact of $0.31 on book value per share. This partially offset the negative impacts from operating losses and dividends [1].

The company’s debt structure and unencumbered asset pool are detailed in the following slide. Looking ahead, Ready Capital faces significant challenges in resolving its non-performing assets, particularly in the CRE portfolio. The company’s strategy of divesting non-core assets and focusing on better-performing segments like Small Business Lending will be crucial for returning to profitability [1].

KBW analyst Jade Rahmani reaffirmed a Sell rating on Ready Capital with a price target of $3.75, citing concerns about the company's financial performance. The analyst consensus on Ready Capital is a Hold with an average price target of $4.44. The stock's market cap is $621.2M and has a P/E ratio of -1.99 [2].

References:
[1] https://www.investing.com/news/company-news/ready-capital-q2-2025-slides-losses-widen-amid-portfolio-repositioning-efforts-93CH-4180156
[2] https://www.quiverquant.com/news/Ready+Capital+Corporation+Reports+Second+Quarter+2025+Financial+Results+with+Continuing+Operations+GAAP+Loss+of+%24%280.31%29+per+Share