Redwood Trust Q2 net loss narrows sequentially, mortgage banking production doubles y/y

Overview

• US mortgage finance firm's Q2 GAAP net loss narrowed from prior quarter

• Non-GAAP EAD and core segments EAD both declined sequentially

• Mortgage banking production exceeded $8 bln for second straight quarter, nearly double last year

Outlook

• Company does not provide specific financial guidance for the upcoming quarter or full year

Result Drivers

• MORTGAGE BANKING VOLUME - Mortgage banking production exceeded $8 bln for the second straight quarter, nearly double the same period last year

• OPERATING POSTURE - Co adopted a more cautious operating posture during April and May amid heightened market volatility, with momentum improving in June

• SEGMENT PERFORMANCE - Mortgage banking platforms' GAAP net income rose 9% from Q1, but CoreVest Mortgage Banking funded 5% fewer loans due to higher rates

Company press release: ID:nBwbRX7Sta

Key Details

Analyst Coverage

• The current average analyst rating on the shares is "buy" and the breakdown of recommendations is 6 "strong buy" or "buy", 2 "hold" and no "sell" or "strong sell"

• The average consensus recommendation for the specialized reits peer group is "buy"

• Wall Street's median 12-month price target for Redwood Trust Inc is $6.00, about 21.5% above its July 27 closing price of $4.94

• The stock recently traded at 5 times the next 12-month earnings vs. a P/E of 5 three months ago

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(This story was created using Reuters automation and AI based on LSEG and company data. It was checked and edited by a Reuters journalist prior to publication.)