Courtesy of Benzinga.
In a report issued Monday, FBR & Co. analysts Daniel Altscher and Cole Allen upgraded their rating on shares of Ares Commercial Real Estate Corp (NYSE: ACRE) from Market Perform to Outperform, while raising their price target from $12.50 to $13.00 after meeting with the company’s management.
Prior to the recently held investor meetings with management, the firm believed the small-cap company had much “to prove in terms of fundamental performance” before it could become positive on the stock. While the current situation may not be perfect, the analysts consider enough progress has been made, especially in ACRE Capital, to warrant their Outperform rating.
According to the research note, the specialists at FBR are “aware of some of the pushback around the stock (e.g., ~$340 million market cap, smaller-than-peer balance sheet, little access to equity capital, negative sentiment remnants from nearly two years ago that just cannot be washed away, etc.),” but still believe investors with a focus on small-caps “owe it to themselves to look at this value stock trading at ~80 percent of book value that is in an active transformation.”
Why Turning Around ACRE Capital Matters?
Since its acquisition was announced in May 2013, the unit has not contributed to earnings and has delivered inconsistent performance. However, this trend seems to have reverted in the past couple of quarters and should continue in the right track, the experts think. Additionally, the unit could represent a sellable asset, at the very least. A few other key elements supporting FBR’s upgrade include “favorable asset sensitivity to higher short-term interest rates, a floor under the stock with a buyback authorization now put in place and inexpensive valuation on a book value per share basis.” Shares of Ares are up about 1.4 percent on Monday trading. Image Credit: Public Domain Other Factors
Latest Ratings for ACRE
| Date | Firm | Action | From | To |
|---|---|---|---|---|
| Jul 2015 | FBR Capital | Upgrades | Market Perform | Outperform |
| Mar 2015 | JMP Securities | Maintains | Market Outperform | |
| Mar 2015 | Keefe Bruyette & Woods | Maintains | Market Perform |
View More Analyst Ratings for ACRE
View the Latest Analyst Ratings
Posted-In: Analyst Color Long Ideas Upgrades Price Target Analyst Ratings Movers Trading Ideas Real Estate
