On Monday, Piper Sandler maintained its Overweight rating on Ellington Financial Inc. (NYSE:NYSE:EFC) with a steady stock price target of $13.00. The firm's analysis followed Ellington's first-quarter 2024 results, which showed earnings below both Piper Sandler's and the consensus estimates, primarily due to a decrease in other income. Despite this, the earnings were reported to be consistent with the previous quarter's performance.
Ellington's recent earnings have been impacted by credit quality concerns, which have contributed to the company's shares trading at less than 90% of book value. Piper Sandler adjusted its core earnings per share (EPS) estimates for 2024 and 2025 to $1.48 and $1.69, down from the prior estimates of $1.64 and $1.78, respectively. This revision reflects the performance seen in the quarter as well as the adjusted earnings runrate over the past two quarters.
Piper Sandler expressed confidence in Ellington's valuation, considering it attractive despite the prevailing uncertainties. The firm anticipates that Ellington will demonstrate adaptability in the market and seize distressed opportunities as they arise, which is expected to enhance core earnings in the upcoming quarters.
The $13.00 stock price target set by Piper Sandler corresponds to approximately 90% of the firm's estimated book value for the first quarter of 2025, a proportion that remains unchanged from previous assessments. Ellington's ability to navigate market conditions and capitalize on potential distressed assets is seen as a key factor in driving future earnings growth.
InvestingPro Insights
Ellington Financial Inc. (NYSE:EFC) is poised for a year of growth, with analysts predicting an increase in net income and sales for the current year. This optimism is underpinned by the company's strong performance in the last twelve months as of Q1 2024, where it posted a robust revenue growth of 114.63%. The company's stock price may exhibit volatility, as indicated by the InvestingPro Tips, yet Ellington Financial has a history of reliability, maintaining dividend payments for 15 consecutive years, a testament to its commitment to shareholder returns.
InvestingPro Data highlights a market capitalization of $1.04 billion, with a P/E ratio that has slightly decreased to 17.67 from 18.01. The dividend yield stands at an impressive 12.84%, despite a recent dividend growth decline. Investors should also note the company's liquidity position, where liquid assets surpass short-term obligations, providing financial stability. For those looking to delve deeper into Ellington Financial's prospects, additional InvestingPro Tips are available, offering comprehensive analyses and forecasts. With the use of coupon code PRONEWS24, readers can access these insights at an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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