Broadmark Realty Capital stock falls after failed Q2 results, Piper downgrade (NYSE:BRMK)

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Broadmark Real Estate Capital (NYSE: BRMK) shares slipped 3.8% Tuesday before market after second-quarter earnings missed the consensus estimate and Piper Sandler analyst Crispin Love downgraded the commercial mortgage REIT stock from neutral to underweight. Macro headwinds and the company’s focus on construction loans threatens BRMK’s dividend, the analyst said.

“We believe a discount to mREIT’s trading peers and book value is appropriate given the company’s focus on construction lending, recession fears and a potential dividend cut. , which are factors that could be an excess over equities over the medium term,” Love wrote in a note. to customers.

“Management has made it clear that it is being more aggressive with problem loans, but we believe this will be a strategy that will take time to see if the credit quality in the portfolio improves given the heightened stringency of the asset quality,” the analyst said.

After Monday’s close, Broadmark (BRMK) released second-quarter distributable EPS of $0.16, missing analysts’ average estimate by a penny. It pays a monthly dividend of $0.07 per share, bringing a quarter’s worth of dividends to $0.21 per share.

Love’s underweight rating contrasts with SA author’s average buy rating and Wall Street’s average buy rating

Even with a lower dividend, Broadmark Realty (BRMK) is reasonably priced, says SA contributor Thomas Andrade Campanini

Sallie R. Loera