Compass Point Upgrades PennyMac Mortgage Investment Trust (PMT) to Buy

Compass Point upgraded PennyMac Mortgage Investment Trust (NYSE: PMT) from Neutral to Buy with a price target of $20.50.

Analyst Kevin Barker commented, "PennyMac Mortgage Trust (PMT - Buy, $20.50 PT) has traded down 19% since we downgraded on February 5, after a poor earnings result from lower fair value marks on their distressed loan portfolio. After two earnings misses and under-earning their dividend, the stock now trades at 84% of 1Q15 TBV while the dividend indicates a yield of 14%. Although we expect the dividend to be cut to $0.50 in 4Q in order to sustain TBV above $20, we believe the risk-reward of owning shares at these levels is favorable given the high dividend yield and the potential earnings catalyst in 2016 from multi-family investments. We also expect 2Q15 to be relatively strong compared to the past few quarters due to seasonally higher home prices driving better returns on whole loans and higher rates causing fair value markups on the MSR."

For an analyst ratings summary and ratings history on PennyMac Mortgage Investment Trust click here. For more ratings news on PennyMac Mortgage Investment Trust click here.

Shares of PennyMac Mortgage Investment Trust closed at $17.30 yesterday.

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