Barclays views the Apollo Commercial Real Est. Finance Inc ARI's purchase of Apollo Residential Mortgage as positive and retained its Equal Weight rating on shares.
The consideration included $217 million of stock (using ARI's August 31 closing price), $219 million cash and the assumption of preferred stock with a liquidation value of $172.5 million. The fair value of the acquired assets is roughly $655 million and ARI estimates $15 million of additional transaction costs.
The brokerage said the deal provides ARI with "(i) common stock priced above book value/current price without issuance fees and (ii) preferred stock at a lower borrowing rate than its in-place preferred stock."
Barclays, which has a price target of $17 on the stock, raised its 2016 adjusted EPS estimate (ex. merger transaction costs) to $2.06 (+8.1 percent year-over-year) from $2.00.
The brokerage also increased its 2017 adjusted EPS view to $2.21 from $1.95 as the new capital will allow ARI to continue actively originating new mortgages.
At time of writing, shares of ARI rose 1.19 percent to $16.96.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Comments
date | ticker | name | Price Target | Upside/Downside | Recommendation | Firm |
---|
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.