AOMR - Angel Oak Mortgage downgraded to Neutral by UBS on profit pressures

UBS analyst Brock Vandervliet downgraded Angel Oak Mortgage (NYSE:AOMR) Wednesday to Neutral from Buy due to wide credit spreads, lower loan yields, and higher funding costs. "The rapid rise in mortgage rates, credit spread widening and AOMR's pipeline of below-market loans pressures this securitization based model," Vandervliet wrote in a note to clients. "This produces heavier than expected pressure on both sides of the spread income equation — wider non-Agency bond spreads reduce securitization profitability and raise funding costs." The analyst said the mix of older vintage loan volume with current production suggest that the pressure will continue at least through Q3. He also expects Angel Oak's (AOMR) core EPS will fall below its $0.45/quarter/share dividend rate in H2 2022. Vandervliet also cut his price target on the stock to $14.50 from $19.50. Angel Oak (AOMR) stock is slipping 0.7% in Wednesday premarket trading. Use SA's stock screener to rank mortgage

For further details see:

Angel Oak Mortgage downgraded to Neutral by UBS on profit pressures