Blackstone Mortgage Trust (NYSE: BXMT) stock price has remained in a tight range in the past few weeks. The stock was trading at $20 on Thursday, a few points below last month’s high of $22.57. It has risen by over 40% from its 2023 lows even as its short interest has risen to 16.65%.
Mixed picture fundamentallyBlackstone Mortgage Trust exists in an industry that has become modestly hated in the current high-interest rate environment. It is an mREIT, which provides senior secured loans mostly to companies in the commercial real estate industry.
This is an industry that is battling numerous challenges like relatively low occupancy rate, high interest rates, and an upcoming wall of maturities. The latter point is important since over $730 billion of these loans matured in 2023 followed by $659 billion in 2024.
The challenge is that most of these loans were taken when interest rates were near zero after the Global Financial Crisis (GFC). Now, refinancing them when interest rates are sitting at the highest point in 22 years is not easy.
Further, office space occupancy stands at 50% rate, the highest point since 2020. This is as high as it can get, meaning that the industry will remain under pressure even if interest rates start coming down.
Blackstone Mortgage Trust stock price has wavered recently as investors reflect on the short-seller report by Muddy Waters. That report highlighted that the company will likely be forced to slash dividends in the second half of the year. You can read the report here.
BXMT has rejected these claims and argued that it has done substantial deleveraging and that its finances were quite strong. It also pointed to its recent financial results, which showed that its revenue rose by 5.88% to $165 million in the third quarter. Its distributable earnings stood at $0.78 per share.
BXMT stock price forecast
Therefore, the goal of this article is not to adjudicate which side between Muddy Waters and BXMT is right. Instead, I intend to carry out a technical analysis and identify whether the stock is a good buy or not.
Turning to the daily chart, we see that the BXMT stock price has pulled back in the past few days. This retreat is notable since it happened when the shares retested the important resistance level at $22.57
A closer look shows that the shares have formed two inverse head and shoulders (H&S) pattern. The shoulders of this pattern is at $22.51. The first one is more recent and is shown in black.
Also, the bigger head and shoulders pattern started to form in 2022. Therefore, the BXMT share price will likely have a bullish breakout in the coming months. This view, however, will be confirmed only if it flips the resistance at $22.51 into a support level.
If this happens, the shares will likely rise to the key resistance at $26.40, its highest swing in July 2022. On the flip side, a drop below the first right shoulder at $19.72 will invalidate the bullish view.
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