JPMorgan Adjusts Blackstone Mortgage Trust’s Stock Target But Maintains Its Rating
In a recent analysis, JPMorgan has adjusted its price target for Blackstone Mortgage Trust following the disclosure of the trust’s earnings for the second quarter of 2024. Blackstone Mortgage Trust, an affiliate under Blackstone (NYSE:BX), reported distributable earnings per share (EPS) of $0.49, which not only exceeded JPMorgan’s prediction of $0.44 but also the consensus estimate of $0.46. However, the company faced $12.5 million in realized losses during the period.
The reported GAAP diluted EPS for the trust indicated a loss of $0.32, which did not meet JPMorgan’s forecast of a $0.53 profit, primarily due to an unexpectedly high provision expense. Additionally, Blackstone Mortgage Trust has announced a significant adjustment to its third-quarter 2024 dividend, decreasing it to $0.47 from the previous $0.62. This reduction surpasses JPMorgan’s earlier projection of a decrease to $0.50 per quarter starting in the first quarter of 2025.
Moreover, the trust observed a downturn in its book value per share, moving from $23.83 to $22.90 quarter over quarter. This stood below both JPMorgan’s and the consensus estimates, which were at $23.71 and $23.63, respectively. Consequently, JPMorgan has recalibrated its December 2025 price target for Blackstone Mortgage Trust, suggesting an 8.5% annualized total return based on 0.75 times its year-end 2025 book value per share estimate of $22.75.
In response to challenges such as extended office space vacancies, Blackstone Mortgage Trust recently disclosed a 24% reduction in its quarterly dividend. Amidst these hurdles, the company reported a quarterly loss of $61.06 million but remains optimistic about future earnings growth facilitated by resolving loans. In a strategic move counteracting these challenges, Blackstone has endorsed a $150 million stock repurchase program.
The commercial real estate market, where Blackstone Mortgage Trust operates, is navigating through uncertainties with a significant volume of the $4.7 trillion in outstanding commercial mortgages approaching maturity in 2024. Experts from Trepp and BTIG acknowledge the tough economic conditions but praise the company for its robust position as the lead global real estate investment platform.
Furthermore, the initiation of coverage by Wolfe Research with a Peer Perform rating spotlights Blackstone’s substantial net loan exposure amid an ongoing rise in U.S. office loan delinquency, exacerbated by spiking office vacancies and surging interest rates. In spite of these adversities, Blackstone’s active portfolio management was evident through its recent $69 million senior loan investment in a resort hotel.
With JPMorgan’s revised outlook, investors are advised to consider a variety of metrics to gauge Blackstone Mortgage Trust’s (NYSE:BXMT) financial condition and future performance effectively. According to InvestingPro data, the trust boasts a market capitalization of around $3.12 billion and maintains a strong dividend yield of 12.63% as of mid-2024, underlining its dedication to shareholder returns. This resilience is further highlighted by its 13-year history of consistent dividend payments.
Although the company’s price-to-earnings (P/E) ratio is currently high at 610, it’s projected to sustain profitability this year. Its stock price is hovering near the 52-week low, which may signal a potential buying opportunity for long-term investors, given the firm’s lasting profitability over the previous year.
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