Shares of PennyMac Mortgage Investment Trust (NYSE:PMT) jumped 1% in the opening session and now trading at $19.53.
PennyMac Mortgage: A PennyMac for Your Thoughts—Initiating Coverage at Buy, $23 PT – B. Riley Securities
B. Riley Securities’ Matt Howlett states, “We believe that PMT has one of the best risk/reward profiles in the mREIT space based on its growth outlook, economic returns combined with the strength of the balance sheet, and underlying risk and capital management. PMT’s diversified investment model is anchored by its origination platform—the #2 correspondent originator in the U.S.—which organically creates assets for investments.
The end product is a cash flow stream generating attractive ROEs that are relatively stable with minimal sensitivity to changes in interest rates. In addition, PMT’s book value growth is supported by income retention through its mortgage production business. Furthermore, we believe PMT’s ties to its sister company and manager, PennyMac Financial Services, Inc. (PFSI), position PMT for strong growth.
PMT can access several investment products and piggyback off the breadth of the PennyMac franchise, which we view as on its way to becoming one of the largest originators and servicers in the U.S. In addition, PMT has access to some of the least expensive financing we have seen in the term note securitization market, which it uses to finance its core portfolio.”