NEW YORK (TheStreet) -- Shares of Chimera Investment(CIM) - Get Report closed up by 1.37% to $14.78 Monday, as the company's price target was raised to $16 from $15 and its "buy" rating was maintained at Nomura.
The firm increased the stock's price target after Chimera reported its 2016 first quarter results earlier in the month, which beat analysts' expectations. The real estate investment trust's results and $1.5 billion "residential securitization" which closed in the period ended March 31 were "turning points" for Chimera, Nomura analysts said in an investor note.
Under new market regulations, all mortgage-backed securities must have an economic sponsor in the deal, which for Chimera, is Springleaf (LEAF). The "Springleaf transaction" replaced Chimera's "virtually impossible to duplicate pre-crisis legacy loan and residential mortgage-backed security portfolio" that was gradually running off, Nomura stated.
"This transaction is very important as it ends this phase and enters a new one with supply and regulatory changes that advantages Chimera's ability to execute further transactions," the firm noted, forecasting a "more durable net interest margin and greater portfolio growth" for the full 2016 year.
Chimera reported 2016 first quarter adjusted earnings of 58 cents per share, higher than analysts' expectation of 54 cents per share but down from the 2015 quarter earnings of 72 cents per share. The company reported revenue of $138.2 million, down year-over-year from revenue of $182.7 million.
Separately, TheStreet Ratings rated Chimera Investment as a "hold" with a score of C.
TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon.
Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
The primary factors that have impacted this rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks.
The company's strengths can be seen in multiple areas, such as its revenue growth, attractive valuation levels and increase in net income. However, as a counter to these strengths, theStreet Ratings finds that the company's return on equity has been disappointing.
You can view the full analysis from the report here: CIM