Chimera Investment: Buy Rating Upgraded on Optimized Liabilities and Promising ROE Growth

Douglas Harter, an analyst from UBS, maintained the Buy rating on Chimera Investment (CIM – Research Report). The associated price target is $15.00.

Douglas Harter has given his Buy rating due to a combination of factors that indicate a positive outlook for Chimera Investment. The company’s ability to optimize its liabilities has freed up substantial capital for reinvestment, leading to better-than-expected book value performance in the first quarter and April. This financial maneuvering is anticipated to enhance earnings and return on equity (ROE) in the near term, with expectations of ROE growing to 10% by the fourth quarter of 2025.
Additionally, the potential for increased dividends, driven by higher earnings estimates, is seen as a catalyst for a higher price-to-book (P/B) multiple. With Chimera trading at a significant discount to its book value, the combination of an attractive 11.5% dividend yield and capital appreciation presents a total return potential of 27%. This optimistic projection justifies the upgrade to a Buy rating, alongside an increased price target of $15, reflecting both improved book value estimates and a higher target multiple.

CIM’s price has also changed moderately for the past six months – from $14.820 to $13.030, which is a -12.08% drop .