BTIG remains bullish on Ready Capital following news of merger with Broadmark

Commenting on the announced all-stock merger of Ready Capital (RC) with Broadmark (BRMK), BTIG says that all else equal, the combined entity can probably support generating a net 10.5% return on proforma book value, especially if Ready Capital can find resolutions for Broadmark’s non-performing portfolio. Further, the firm believes resolving and reinvesting that capital is the most material catalyst for valuation improvement stemming from the merger. It would especially support visibility for liquidity on Ready Capital’s balance sheet, which it thinks all lenders remain sensitive to right now. More broadly, BTIG likes the consistency RC has developed in acquiring smaller lenders as a source of growth and capital deployment. The firm has a Buy rating on Ready Capital with a price target of $14.50.