Nomura Securities Downgrades Great Ajax Corp. (AJX) to Neutral
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Nomura Securities downgraded Great Ajax Corp. (NYSE: AJX) from Buy to Neutral with a price target of $14.50 (from $16.00).
Analyst Brock Vandervliet commented, "We are downgrading our investment rating on Great Ajax from Buy to Neutral, reducing our TP from $16 to $14.50 and reducing our earnings estimates. Reasons behind the move include: One, we are reducing earnings projections materially in line with the implications of the Q3 print. Revisions include Q4 moving to $0.46 from $0.61, and 2017 moving to $2.14 from $2.38, previously. We do not believe Street estimates are updated post-Q3 but are $0.57 and $2.42, respectively. Two, as part of the lower earnings, AJX has not ramped its dividend as we had expected. While we maintain a roughly 60% payout ratio, our 2017 dividend assumption moves down from $1.34 to $1.15. Three, we are concerned about the continued potential for a dilutive capital raise, with one earlier in the year and a recently announced $50Mn “ATM” (At the Market Issuance) offering. We believe that coupled with the lower earnings, the stock is likely capped below book value."
Shares of Great Ajax Corp. closed at $13.57 yesterday.
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