Keefe Bruyette Lowers Blackstone Mortgage Price Target to $19.50

Keefe Bruyette analyst Jade Rahmani lowered Blackstone Mortgage's (BXMT) price target to $19.50 from $20 and maintains a Market Perform rating. The firm reduced 2025 and 2026 estimates based on the timing of originations and repayments post Q2 report.

Keefe Bruyette analyst Jade Rahmani has revised the price target for Blackstone Mortgage Trust (BXMT) to $19.50 from the previous $20, maintaining a Market Perform rating. The adjustment comes following the timing of originations and repayments post the company's second-quarter report. The firm has updated its financial outlook for 2025 and 2026 to reflect these projections [2].

Blackstone Mortgage Trust, a real estate finance company, specializes in the origination and purchase of senior loans secured by commercial properties across North America, Europe, and Australia. The company's asset portfolio is predominantly composed of floating rate loans, with a significant portion of these mortgages derived from office, hotel, and manufactured housing properties. Notably, a substantial percentage of the collateralized real estate properties are located in key markets such as New York, California, and the United Kingdom. The company benefits from the extensive market data provided by its parent company, The Blackstone Group [2].

The company's financial health presents a mixed picture. While revenue growth over the last 12 months was $477.73 million, there has been a concerning 1-year revenue growth decline of 24.4%. Over a 3-year period, revenue growth has decreased by 5.8%, while the 5-year and 10-year growth rates are marginally positive at 0.3% and 0.9%, respectively. The company faces challenges in profitability, with a net margin of -16.87% and an EPS of -$0.45. The debt-to-equity ratio stands at 4.33, indicating a high level of leverage, which is a potential risk factor. However, the free cash flow yield of 11.64% and a free cash flow margin of 77.94% provide some cushion [2].

The company's business performance is influenced by several factors, including declining revenue growth, operational inefficiencies, and exposure to interest rate fluctuations. As a REIT, Blackstone Mortgage Trust is subject to interest rate risks, which can impact its loan portfolio's performance and refinancing capabilities. The geographic diversification of its assets provides some risk mitigation against localized economic downturns [2].

Valuation metrics and market sentiment indicate that the stock may be modestly overvalued. The price-to-sales (P/S) ratio is 6.76, close to its 2-year high of 7.32, while the price-to-book (P/B) ratio is 0.87, nearing its 2-year high of 0.95. The adjusted price target of $19.50 reflects a cautious outlook, aligning with the Market Perform rating. The relative strength index (RSI) of 35.68 indicates that the stock is approaching oversold territory, which could present a buying opportunity if fundamentals improve. Institutional investors hold 64.37% of the company's shares, indicating a significant level of professional interest and potential influence on stock performance [2].

In conclusion, while Blackstone Mortgage Trust faces challenges in revenue growth and profitability, its strategic positioning in the real estate finance market and geographic diversification offer potential avenues for recovery. Investors should closely monitor the company's financial health and market conditions to assess future performance prospects [2].

References:
[1] https://www.nasdaq.com/articles/blackstone-mortgage-trust-bxmt-lags-q2-earnings-and-revenue-estimates
[2] https://www.gurufocus.com/news/3020778/blackstone-mortgage-bxmt-price-target-reduced-by-analyst