Walker & Dunlop, Inc. WD shares are trading lower after Wedbush analyst Jay McCanless downgraded the stock to Neutral from Outperform and cut the price target to $95 (from $130).
The analyst’s re-rating reflects the expectation that a higher for longer rate environment will again put pressure on transaction volumes this year.
The analyst says that the rate of volatility is showing no signs of easing and fears that the consistent rate of volatility seen thus far through 2024 has not helped to fix the ongoing negative leverage issue.
Although Walker & Dunlop is one of the largest Agency multifamily lenders in the country, the analyst doesn’t expect the company to be the beneficiary of an expected 73% uptick in non-bank multifamily maturities this year.
Despite an expected increase in transaction and origination volumes in 2024, McCanless says that the higher rates could limit the amount of maturing loans that the company refinances.
Consequently, the analyst reduced EPS estimates to $3.40 (from $3.60) for 2024 and $4.30 (from $4.50) for 2025, owing to lower transaction volume assumptions.
Price Action: WD shares are down 1.60% at $91.15 on the last check Thursday.
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