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Shares of Ellington Financial (EFC) on Wednesday dropped 4.3% in the pre-market trading session after it announced to price an underwritten public offering of 6 million shares of common stock at $18.22 per share.
Ellington is a specialty finance company that invests in a diverse array of financial assets. The offering is subject to customary closing conditions and is anticipated to close on July 9, 2021. The company has given the underwriters a 30-day option to purchase up to an additional 900,000 shares of Ellington’s common stock at the public offering price.
The company seeks to utilize net proceeds from the shares sale to acquire its targeted assets and for working capital and general corporate purposes. (See Ellington stock chart on TipRanks)
The shares of common stock will be issued under Ellington’s existing shelf registration statement on Form S-3, which was declared effective by the SEC on April 9, 2021.
Last month, UBS analyst Brock Vandervliet downgraded the stock’s rating to Hold from Buy with a price target of $18.50 (2% downside potential from current levels).
Vandervliet said, “With the Federal Reserve potentially beginning to “taper” as part of an effort to pave the way for higher interest rates, book value performance could be at greater risk.”
The rest of the Street is optimistic about the stock with a Strong Buy consensus rating based on 4 Buys and 1 Hold. The average Ellington price target of $19.10 implies 1.2% upside potential from current levels.
EFC scores a 9 out of 10 on TipRanks’ Smart Score rating system, suggesting that the stock is likely to outperform market averages.
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