Walker & Dunlop Snaps up TapCap; Street Sees 29% Upside

The largest capital provider to the multifamily industry in the U.S., Walker & Dunlop (WD), has acquired TapCap in a bid to grow small balance lending.

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TapCap’s platform offers real-time quote data for commercial real estate debt, which streamlines the process of loan application and origination. This, in turn, improves the experience of borrowers. The acquisition is expected to accelerate growth in Walker & Dunlop’s lending verticals.

Walker & Dunlop’s Small Balance Lending Chief Production Officer Alison Williams said, “We have been investing heavily this year in loan origination talent to scale our small loan originations to $5 billion by 2025. But penetrating the small-balance lending market requires cutting-edge technology to reduce costs while providing an exceptional customer experience.” (See Walker & Dunlop stock chart on TipRanks)

Williams added, “Adding TapCap’s technology will make our lending processes more transparent, efficient, and scalable – and accelerate our growth towards $5 billion.”

On June 14, Wolfe Research analyst Andrew Rosivach initiated coverage on the stock with a $147 price target (32.2% upside potential).

The other analyst covering the stock, JMP Securities’ Steven Delaney also has a Buy rating on the stock alongside a price target of $130 (21.3% upside potential).

During Walker & Dunlop’s recent Q1 earnings call, Delaney asked for more color on the company’s market share dynamics. To this, its Chairman and CEO, Willy Walker, answered that on a combined basis with Fannie Mae and Freddie Mac, the company has grown its Fannie market share up to about 15% at the end of 2020 and is confident of achieving the same level this year as well.

The two ratings add up to a Moderate Buy consensus rating. The average Walker & Dunlop analyst price target of $138.50 implies 29.2% upside potential. Shares have gained 113.7% over the past year.