Blackstone Mortgage Trust (BXMT) is back in focus after One South Wacker in Chicago reportedly defaulted on a loan tied to the company, prompting an analyst to trim estimates for expected losses.

At a share price of $17.25, Blackstone Mortgage Trust has seen its 30 day share price return fall 5.79% and its year to date share price return decline 11.45%. The 3 year total shareholder return of 16.43% contrasts with a 1 year total shareholder return that is down 3.72%, suggesting recent momentum has faded as investors reassess risk after the One South Wacker default and recent index inclusion.

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With Blackstone Mortgage Trust now trading at $17.25, with a value score of 1 and a discount to the average analyst price target, the key question is whether this reflects hidden upside or if the market is already pricing in future growth.

Most Popular Narrative: 18% Undervalued

With Blackstone Mortgage Trust trading at $17.25 against a most followed fair value of $21.00, the narrative centers on whether future earnings and margins can justify that gap using an 8.53% discount rate.

The analysts have a consensus price target of $21.0 for Blackstone Mortgage Trust based on their expectations of its future earnings growth, profit margins and other risk factors.

In order for you to agree with the analysts, you'd need to believe that by 2029, revenues will be $305.3 million, earnings will come to $272.9 million, and it would be trading on a PE ratio of 16.0x, assuming you use a discount rate of 8.5%.

Want to see what justifies that higher fair value for Blackstone Mortgage Trust? The narrative leans on shrinking revenues, sharply higher margins and a re rated earnings multiple. Curious which assumptions really carry the model and how they fit together over time?

Result: Fair Value of $21 (UNDERVALUED)

However, this hinges on Blackstone Mortgage Trust managing tariff uncertainty and resolving US$970 million of impaired loans that currently carry costs without contributing income.

Another View on Blackstone Mortgage Trust's Valuation

While the fair value narrative suggests Blackstone Mortgage Trust is undervalued at $17.25 versus $21.00, the share price tells a different story when compared with earnings. BXMT trades on a P/E of 28.5x, versus a peer average of 15.5x and a fair ratio of 17.2x. This points to a richer valuation that could limit upside if sentiment weakens. How comfortable are you with paying well above both peers and that fair ratio for this stock?

For a closer look at how those earnings based ratios stack up across the sector, and what that gap might mean for future risk or opportunity, See what the numbers say about this price — find out in our valuation breakdown.

Next Steps

If the mixed signals around Blackstone Mortgage Trust leave you uncertain, move quickly from reading to reviewing the data and shaping your own view with 3 key rewards and 2 important warning signs

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.