Investment bank and financial services company Credit Suisse last week reiterated its coverage of stock in Finance of America Companies (FOA) with a “neutral” recommendation, according to reporting at Fintel.
“As of August 2, 2023, the average one-year price target for [FOA] is $2.55,” the report said. “The forecasts range from a low of $2.52 to a high of $2.62. The average price target represents an increase of 54.55% from its latest reported closing price of $1.65.”
As of late-day trading on Monday, FOA’s share price stands at $1.63 according to Yahoo Finance. Projected annual revenue for FOA is $596 million according to Credit Suisse, which would mark a 3.18% increase over 2022 annual revenue.
Interestingly, Blackstone Group appears to have raised its stake in FOA, according to the report at Fintel.
“Blackstone Group holds 32,488K shares representing 37.05% ownership of the company,” the report said. “In its prior filing, the firm reported owning 21,716K shares, representing an increase of 33.15%. The firm increased its portfolio allocation in FOA by 57.68% over the last quarter.”
Meanwhile, Adage Capital Partners Group slightly decreased its stake in FOA, while Long Focus Capital Management slightly raised its stake in FOA by 1.88%.
This comes after a tough Q2 earnings report for FOA, where the company detailed how it endured a net loss of $221 million. Company leaders attributed the loss to the negative impact of mortgage rates and spreads, and that growth in the reverse mortgage division could not offset increased costs associated with the incorporation of assets of American Advisors Group (AAG) into its infrastructure.
Because of the AAG acquisition, FOA CEO Graham Fleming pointed out that FOA is now the clearly dominant player in the reverse mortgage industry.
“The combined Finance of America and AAG brands now have a commanding market share lead in reverse mortgages, with a nearly 40% share of the [Home Equity Conversion Mortgage (HECM)] market year-to-date, measured by [HECM-backed Securities (HMBS)] issuance,” Fleming said.
Fleming added that FOA will begin making use of AAG’s industry-ubiquitous marketing apparatus, which FOA President Kristen Sieffert previously described as a key element of the acquisition.
“Our acquisition of the AAG platform and the sophisticated marketing engine has the ability to further raise product awareness and increase the addressable market,” Fleming said. “Despite a difficult economic environment and amid a complex integration [process], we are starting to see positive traction in our pipeline and operational processes.”