Analyst Eric Hagen of BTIG maintained a Buy rating on Rithm Capital, retaining the price target of $16.00.
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Eric Hagen has given his Buy rating due to a combination of factors, including the anticipation of strong earnings driven by robust loan growth in Newrez. This is expected to boost the stock’s performance, especially since it has underperformed compared to the broader market and financial sector since March. The stock’s valuation, being below 6x earnings with an 8.5% dividend yield, presents an attractive opportunity for investors looking for a turnaround and growth story in an asset manager.
Additionally, the potential for higher returns and improved valuations in the mortgage business if interest rates decline further supports the Buy rating. The strong quarterly mortgage loan growth reported by major banks like JPMorgan and Wells Fargo is expected to bolster earnings and valuations for independent mortgage banks, including Rithm Capital. The company’s ability to capitalize on servicing more on its balance sheet and the potential for sustainable earnings growth as interest rates stabilize further solidify the positive outlook for the stock.
Hagen covers the Real Estate sector, focusing on stocks such as Dynex Capital, Rithm Capital, and ARMOUR Residential REIT. According to TipRanks, Hagen has an average return of 2.8% and a 52.77% success rate on recommended stocks.
In another report released yesterday, UBS also maintained a Buy rating on the stock with a $14.00 price target.