Wells Fargo analyst Michael Kaye downgraded PennyMac Financial to Market Perform from Outperform and lowered his price target for the shares to $21 from $28. The analyst attributes lower gain-on-sale and higher operating expenses for the earnings miss in Q1. With interest rates rising "rapidly," the mortgage market has become more challenging than we originally projected, Kaye tells investors in a research note. He notes that lower industry-wide origination volume has led competitors to compress pricing in order to fight for dampening lending volumes. Kaye says PennyMac is "not immune" to the "tough" market conditions.

Wells Fargo lowered the firm's price target on PennyMac Financial to $105 from $110 and keeps an Overweight rating on the shares. There was a lot to like in the quarter including a 15% operating ROE and better than expected production earnings while servicing continues to be an important contributor, the analyst tells investors in a research note.

Deutsche Bank lowered the firm's price target on PennyMac Financial to $112 from $115 and keeps a Buy rating on the shares. The analyst says the company's Q1 margins offset volume weakness.