UPDATE: JMP Securities Reiterates Market Outperform Rating, Raises PT on Apollo Commercial Real Estate Finance Following Significant Investment Portfolio Growth

In a report published Monday, JMP Securities analyst Steven C. DeLaney reiterated a Market Outperform rating on

, and raised the price target from $18.00 to $18.50. In the report, JMP Securities noted, “We reiterate our Market Outperform rating and increase our estimates on Apollo Commercial Real Estate Finance, Inc. after significant investment portfolio growth in 2Q14. We update our model following Apollo Commercial's strong 2Q results, and increase our 2014/2015 core EPS estimates to $1.70/$1.80 from $1.60/$1.70, and compared to current consensus estimates from SNL Financial of $1.73/$1.90. Our higher estimates suggest that there is the potential for an increase in the company's current $0.40 quarterly dividend rate next year, and we project a $0.42 payout beginning in 1Q15. With the higher dividend forecast, we increase our price target by 2.8% to $18.50 from $18.00. Our revised target is based on a required dividend yield assumption of 9%. In 2Q, ARI originated ~$402 million of new CRE loans, and grew the total loan portfolio by ~63% to ~$1.1 billion at June 30 from ~$670 million at March 31. As a result, core EPS improved to $0.42 in 2Q, an increase of $0.05 or 13.5% sequentially from $0.37 in 1Q, and fully covered the current dividend rate for the first time since 1Q13. We reiterate our Market Outperform rating based on our view that ARI shares could provide a total return opportunity of ~20% over the next yield if our revised $18.50 price target is achieved.” Apollo Commercial Real Estate Finance closed on Friday at $16.81.