Santa Fe, New Mexico-based mortgage lender Thornburg Mortgage saw its analyst rating upgraded to “hold” from “sell” and its price target lifted to $9.50 from $7.00 today.
Citi analysts praised the jumbo loan lender for weathering the current storm, but warned that there wouldn’t be much upside to any company in the residential mortgage arena.
“TMA is in the process of recovering from a major liquidity crisis and has taken positive steps such as selling assets and raising capital. While we don’t see significant upside to the shares given the headwinds in the residential mortgage market, the steps taken by TMA to increase the liquidity position and aggressive Fed cuts take a good bit of the risk out of the story,” analysts said.
Last week, the company said it raised $212 million in a public offering with the intent to use the majority of the proceeds to buy or make adjustable-rate mortgages.
The remainder of the proceeds will be used to boost liquidity and working capital.
Thornburg offers a number of generally higher-risk loan programs, including adjustable-rate mortgages on loan amounts up to $2 million, but offsets risk by focusing on “individuals with sophisticated financial profiles.”
However, the market has been especially difficult for Thornburg, as investors continue to snub loans that don’t meet agency standards.
Shares of Thornburg were up 34 cents, or 3.39%, to $10.37 in late trading on Wall Street, well below their 52-week high of $28.40.