What Happened?
Shares of real estate investment trust Arbor Realty Trust (NYSE: ABR) fell 4.5% in the afternoon session after an analyst at Keefe, Bruyette & Woods downgraded the stock to "Underperform" from "Market Perform" and lowered the price target.
The downgrade came from analyst Jade Rahmani. In addition to the new rating, the firm also significantly cut its price target for the company's shares. The price target was lowered by 22.73%, moving from $11.00 down to $8.50. Such rating changes from financial analysts can influence investor sentiment and often lead to shifts in a stock's price as the market reacts to the more cautious outlook.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Arbor Realty Trust? Access our full analysis report here.
What Is The Market Telling Us
Arbor Realty Trust’s shares are not very volatile and have only had 8 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was about 2 months ago when the stock dropped 15% on the news that the company reported disappointing third-quarter 2025 results that missed Wall Street's top-line expectations.
The company generated revenue of $112.4 million, a 28.2% year-over-year decline and well below analysts' consensus estimate of $151.4 million. The miss was even more pronounced in its core lending operations, as net interest income plummeted 56.9% from the prior year to $38.27 million, falling 47% short of expectations. While Arbor's GAAP earnings of $0.20 per share narrowly beat forecasts, the figure was down significantly from $0.31 in the same quarter last year. Overall, the market's sharp negative reaction suggested investors were focused on the steep deterioration in revenue and income rather than the minor earnings beat.
Arbor Realty Trust is down 38.5% since the beginning of the year, and at $8.48 per share, it is trading 41.2% below its 52-week high of $14.41 from December 2024. Investors who bought $1,000 worth of Arbor Realty Trust’s shares 5 years ago would now be looking at an investment worth $589.36.
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