Keefe, Bruyette & Woods has raised its price target on Redwood Trust stock (NYSE: RWT) to $7.00 from $5.75 while maintaining a Market Perform rating.
The firm increased its estimates for core earnings available for distribution to $1.00 for fiscal year 2026 and $1.10 for fiscal year 2027, up from prior forecasts of $0.80 and $0.85, respectively. Those revisions followed what the firm described as a strong quarterly result and favorable commentary from management on operating trends through the start of the current quarter.
Keefe calculated a tangible book value of $7.07 at the quarter end. On the basis of its new price target, the $7 objective corresponds to roughly 1x tangible book value, compared with about 80% of tangible book value under the prior target. At the time of the report, shares were trading at approximately 94% of tangible book value and were trading higher after the earnings release, having risen roughly 20% on the news. The stock also offers about a 10% dividend yield.
The updated core earnings estimates imply core return on tangible common equity of approximately 14% for fiscal 2026 and 14.9% for fiscal 2027 under Keefe’s model.
The company’s most recent quarterly results were mixed. Redwood Trust reported fourth-quarter 2025 earnings per share of $0.13, which missed the $0.15 expectation by 13.33%. Revenue, however, came in at $87.2 million, beating the $74.64 million forecast and producing a positive surprise of 16.83%.
Keefe’s upward revision to earnings available for distribution and the higher price target were noted alongside the revenue beat and management’s positive comments on operating momentum. Analysts’ forecasts referenced by the firm indicate expectations for net income growth this year despite the company not having posted a profit over the prior twelve months.
No recent analyst upgrades or downgrades were reported for Redwood Trust by other firms in connection with the release. Investors assessing the company will likely weigh the mixed quarterly results — an EPS shortfall contrasting with a revenue beat — together with the updated estimates and the valuation implied by the new $7 target.
Context for investors
- Price target raised to $7.00 from $5.75 while Market Perform rating is unchanged.
- Fiscal 2026 and 2027 core EAD estimates increased to $1.00 and $1.10 from $0.80 and $0.85.
- Quarterly EPS missed expectations while revenue exceeded forecasts; shares rose about 20% after the report.