| Over a week ago | ||||
Piper Sandler analyst… Piper Sandler analyst Kevin Barker lowered the firm's price target on PennyMac Financial to $79 from $82 and keeps an Overweight rating on the shares. The analyst expects Q2 mortgage banking earnings to be under pressure due to margin compression and reduced origination volume with higher interest rates halting refinance demand. He continues to recommend investors favor originators with valuation support, relatively large servicing fee streams, and the potential for company-specific catalysts. | ||||
| Over a month ago | ||||
JMP Securities analyst… JMP Securities analyst Trevor Cranston lowered the firm's price target on PennyMac Financial to $65 from $75 to reflect the rapid increase in interest rates this year and the pressure that has created on origination economics but keeps an Outperform rating on the shares. Cranston states that PennyMac's current valuation of 80% of book value represents an "attractive long-term value" and that the stock should be a relative winner within the industry as it adjusts to a different interest rate and origination environment. | ||||
Barclays analyst Mark… Barclays analyst Mark DeVries lowered the firm's price target on PennyMac Financial to $90 from $103 and keeps an Overweight rating on the shares. The company's earnings missed in the quarter with the challenging environment likely to continue through the middle of 2022, DeVries tells investors in a research note. | ||||
Reports Q1 revenue… Reports Q1 revenue $657.504M, consensus $630.37M. "PFSI reported solid first quarter financial results, producing an annualized return on equity of 20 percent and demonstrating the strength of our balanced business model against a backdrop of rapid and significant increases in mortgage rates," said Chairman and Chief Executive Officer David Spector. "Our earnings were driven by strong contributions from our large and growing servicing portfolio with 2.2 million customers and nearly $520 billion in unpaid principal balance. However, the unprecedented increase in mortgage rates resulted in lower overall industry origination volumes and left originators and aggregators who still hold excess operational capacity competing for a much smaller population of loans. This transitioning mortgage origination market contributed to the reduced financial performance in our production business." Spector continued, "We remain committed to driving further efficiencies across the platform while actively aligning our expense base with the expected lower levels of activity. As a public company for nearly nine years, PennyMac Financial has a long history of demonstrating success while managing through varying interest rate environments. I believe our scaled and comprehensive platform, including our commitment to enterprise risk management, and new initiatives across our business will enable us to navigate this challenging mortgage market." | ||||
The Consumer Financial… The Consumer Financial Protection Bureau announced that it is invoking a largely unused legal provision to examine nonbank financial companies that pose risks to consumers. The CFPB believes that utilizing this dormant authority will help protect consumers and level the playing field between banks and nonbanks. The CFPB is also seeking public comments on a procedural rule to make this process more transparent. "Given the rapid growth of consumer offerings by nonbanks, the CFPB is now utilizing a dormant authority to hold nonbanks to the same standards that banks are held to," said CFPB Director Rohit Chopra. "This authority gives us critical agility to move as quickly as the market, allowing us to conduct examinations of financial companies posing risks to consumers and stop harm before it spreads." The CFPB is also issuing a procedural rule to increase the transparency of the risk-determination process. Unlike other provisions of law regarding nonbank supervision, entities subject to supervision based on risk are given notice and an opportunity to respond. In order to provide greater guidance to the marketplace on how the CFPB will make determinations, the CFPB is updating an aspect of its procedures for risk determinations to authorize the release of certain information about any final determinations made. Publicly traded companies that may be impacted include Rocket (RKT), LoanDepot (LDI), Lending Club (LC), Block (SQ), PayPal (PYPL), and SOFI (SOFI). | ||||
As previously reported,… As previously reported, BTIG analyst Eric Hagen initiated coverage of PennyMac Financial with a Buy rating and $60 price target. As the largest correspondent loan aggregator in the U.S. and largest non-bank originator and servicer of government mortgage loans, PennyMac carries the most attractive scale and risk management among the originators on which he is launching coverage, Hagen tells investors. He sees PennyMac being in the best position among the group to repurchase stock in a backdrop of slower mortgage markets, Hagen added. | ||||
BTIG analyst Eric Hagen… BTIG analyst Eric Hagen initiated coverage of PennyMac Financial with a Buy rating and $60 price target. | ||||
Barclays analyst Mark… Barclays analyst Mark DeVries lowered the firm's price target on PennyMac Financial to $103 from $113 and keeps an Overweight rating on the shares. Sharply rising mortgage rates are likely to result in an abrupt end to the long refinance wave, and subsequently pressure profitability and valuations, DeVries tells investors in a research note. The analyst expects the first half of 2022 to be "one of the more challenging environments in recent memory for the originators." However, he says title insurers look better positioned to navigate declining refi demand. | ||||
| Over a quarter ago | ||||
Piper Sandler analyst… Piper Sandler analyst Kevin Barker lowered the firm's price target on PennyMac Financial to $98 from $117 and keeps an Overweight rating on the shares. The analyst expects Q1 mortgage banking earnings to be under pressure due to margin compression and increasing competitive pressures across all channels due to reduced seasonal demand combined with excess capacity. He continues to recommend investors favor originators "with valuation support, relatively large servicing fee streams, and the potential for company-specific catalysts." Agency mortgage real estate investment trusts also will see book value pressure due to spread widening, Barker contends. | ||||
Reports Q4 revenue… Reports Q4 revenue $693.8M, consensus $762.58M. "PennyMac Financial's results in the fourth quarter demonstrate the earnings power of our balanced mortgage banking model, with pretax income from our servicing business exceeding that from our production business," said Chairman and CEO David Spector. "The strong fourth quarter also culminated another year of outstanding operational performance for the company. In fact, Pennymac's total production for the year, including acquisitions made by PMT, was a record $234 billion in unpaid principal balance, up nearly 20 percent from the prior year. These production volumes led to servicing portfolio growth of 19 percent despite elevated prepayment activity throughout the year, and we ended 2021 with a servicing portfolio of approximately $510 billion in unpaid principal balance with more than 2.1 million customers. 2021 was also a year of exceptional financial performance, as PennyMac Financial delivered a return on equity of 29 percent and returned more than $1 billion in capital to stockholders through repurchases and cash dividends." | ||||
