BRMK - Broadmark Realty Capital stock falls after Q2 earnings miss Piper downgrade

Broadmark Realty Capital ( NYSE: BRMK ) shares slid 3.8% in Tuesday premarket trading after Q2 earnings missed the consensus estimate and Piper Sandler analyst Crispin Love downgraded the commercial mortgage REIT stock to Underweight from Neutral. Macro headwinds and the company's focus on construction loans threaten BRMK's dividend, the analyst said.

"We believe a discount to commercial mREIT peers and book value is appropriate given the company's construction loan focus, recessionary fears, and a potential dividend cut which are factors that could be an overhang on shares over the intermediate term," Love wrote in a note to clients.

"Management has made it clear they are 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 increased rigor in asset quality," the analyst said.

After the close on Monday, Broadmark ( BRMK ) posted Q2 distributable EPS of $0.16 , missing the average analyst 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 the average SA Author's rating of Buy and the average Wall Street rating of Buy

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

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