- New Residential Investment's (NRZ +0.6%) "ability to protect book value in a volatile and falling rate environment is a positive development that should alleviate concerns about the company's interest rate sensitivity," writes BTIG analyst Giuliano Bologna in a note to client.
- The company's hedging gains helped protect book value, which at $16.25 exceeded Bologna's estimate of $16.19.
- Looking ahead, NRZ's acquisition of $1.2B of assets from Ditech, which closed early in Q4, should "drive incremental operating earnings and cash flow generation," Bologna says.
- Notes that management targets ~$40B of origination volume in FY2020, up from $22B expected in FY2019.
- "At a 12.8% dividend yield and a discount to book value, we believe NRZ shares continue to be undervalued," concludes Bologna, who rates the stock a buy with a price target of $18.00.
- Sell-Side average rating is Outperform (3 Buy, 7 Outperform); average price target of $18.05.
- Previously: New Residential book value rises despite rate volatility (Oct. 25)