Redwood Trust Downgraded to Market Perform by Keefe Bruyette, Price Target Set at $6.50

Keefe Bruyette has downgraded Redwood Trust (RWT) from Outperform to Market Perform, citing a lack of immediate growth drivers. The new price target is $6.50. Analysts forecast an average target price of $7.38, implying a 21.50% upside from the current price of $6.07. The average brokerage recommendation is 2.3, indicating "Outperform" status.

Keefe Bruyette & Woods has downgraded Redwood Trust (RWT) from an Outperform rating to Market Perform. The downgrade comes ahead of the company's second-quarter earnings review, with a new price target set at $6.50. The firm attributes the downgrade to a lack of immediate growth drivers, anticipating that Redwood's return on equity will remain in the single digits through 2025.

Analysts have forecast an average target price of $7.38 for Redwood Trust Inc, implying a 21.50% upside from the current price of $6.07. The consensus brokerage recommendation stands at 2.3, indicating "Outperform" status [1].

In the first quarter of 2025, Redwood Trust reported a sequential improvement in GAAP earnings, achieving $14.4 million or $0.10 per share. The company also experienced a 73% increase in lock volume quarter-over-quarter, reaching $4 billion, the highest level since 2021. Net income from Sequoia was $28.5 million, representing a 28% return on equity (ROE) for the quarter, up from 23% in the previous quarter. Redwood Trust ended the quarter with unrestricted cash of $260 million, indicating strong liquidity [2].

However, the company faces challenges from market volatility and heightened recession risks, impacting its strategic planning and financial performance. Additionally, the book value per share declined slightly from $8.46 in the fourth quarter to $8.39, despite a positive economic return of 1.3% for the first quarter. Delinquency rates increased due to credit migration on select vintage multifamily bridge loan exposures, which the company is actively resolving [2].

Blackstone Mortgage Trust (BXMT), another real estate investment trust, has seen its target price lifted by analysts at Keefe, Bruyette & Woods from $19.50 to $20.00. The brokerage presently has a "market perform" rating on the stock. The new target price indicates a potential downside of 0.37% from the company's current price [3].

References:
[1] https://www.gurufocus.com/news/2968363/redwood-trust-rwt-downgraded-to-market-perform-by-keefe-bruyette-rwt-stock-news
[2] https://www.businesswire.com/news/home/20241212007535/en/Redwood-Trust-Announces-Common-Dividend-Increase-of-5.9-to-%240.18-Per-Share-for-the-Fourth-Quarter-2024
[3] https://www.marketbeat.com/instant-alerts/blackstone-mortgage-trust-nysebxmt-price-target-raised-to-2000-at-keefe-bruyette-woods-2025-07-10/