FBR Capital Raises Price Target on Ares Commercial Real Estate (ACRE) to $14.75 Following Investor Meetings
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FBR Capital reiterated an Outperform rating on Ares Commercial Real Estate (NYSE: ACRE), and raised the price target to $14.75 (from $14.00), following investor meetings. FBR views the company as an underappreciated story that offers shareholders an attractive risk-adjusted return. ACRE has a clean-focused approach and value derived from its broader Ares sponsorship.
Analyst Jessica Levi-Ribner commented, "We raise our price target to $14.75 from $14.00 following investor meetings with CFO Tae-Sik Yoon and head of investor relations, John Stilmar. While we understand that a ~$400M market cap company may warrant a modest liquidity discount relative to its larger peers, we do not believe the ~8% discount to book value and a more severe discount to peers is warranted, especially when the company continues to check all the right boxes. In our view, ACRE is an underappreciated story that offers shareholders an attractive risk-adjusted return given its clean-focused approach and value derived from its broader Ares sponsorship. Without even the slightest hint of a dilutive equity raise or dividend cut coming for the foreseeable future, we believe shares of ACRE offer a compelling risk/reward opportunity, currently trading at 92% of book value and indicating a yield of 7.7% with potential upside to that yield given the likelihood of a dividend raise at year-end."
Shares of Ares Commercial closed at $13.58 yesterday.
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