FBR Capital Downgrades Resource Capital Corp (RSO) to Market Perform
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FBR Capital downgraded Resource Capital Corp (NYSE: RSO) from Outperform to Market Perform with a price target of $9.75 (from $13.00).
Analyst Jessica Levi-Ribner commented, "We are downgrading Resource Capital to Market Perform from Outperform following its announcement of a strategic restructuring initiative in which the company will divest non-CRE investments and certain legacy CRE debt investments. As part of this initiative, the company announced that it is cutting its quarterly dividend to $0.05 through 2017, down from the 3Q16 dividend of $0.42, and that Jonathan Cohen, its CEO, president, and director, has been replaced. While these restructuring efforts should be accretive to earnings in the long term, the uncertainty surrounding what the dividend policy will be based on, where earnings power will shake out upon the completion of all restructuring initiatives, and how long it will take to complete these initiatives puts us on the sidelines for now despite the stock trading at a seemingly attractive valuation. As such, in addition to our downgrade, we are lowering our price target to $9.75 from $13, which implies a ~30% discount to our FY17E book value of $13.82."
Shares of Resource Capital Corp closed at $8.57 yesterday.
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