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KBW lifts Ellington and Longbridge outlook after strong Q2

Keefe, Bruyette & Woods said Ellington reverse mortgage unit Longbridge originated $589.7M in Q2 loans, up 38% year over year.

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Keefe, Bruyette & Woods raised its outlook for Ellington Financial after the company reported strong second-quarter results, including adjusted distributable earnings (ADE) of $0.60 per share.

KBW said it moderately increased Ellington Financial EPS guidance to $2.12 for 2026 and $2.05 for 2027. The analysts also framed the move around the Q2 outperformance versus their prior expectation of $0.46 per share and noted that ADE exceeded the company’s $0.39 quarterly dividend.

Longbridge Financial, Ellington’s reverse mortgage subsidiary, accounted for more than half of the Q2 profit and originated $589.7M in reverse mortgages, up 38% year over year, according to the note. KBW also said its estimates imply return on equity of roughly 15.3% this year and 14.3% next year, compared with 17.7% in the second quarter.

In the same update, KBW maintained its $15 per share price target, equating it to 1.1 times book value, and reiterated an outperformer view. The firm noted that shares were trading around $13.40 on Monday, down 1.51% from Friday’s close.

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