COOP - Mr. Cooper stock gains 5% as strong servicing performance drives Q4 adj earnings beat

Mr. Cooper ( NASDAQ: COOP ) stock gained as much as 5% on Friday after the nonbank mortgage lender's Q4 adj. earnings topped estimates helped by strong performance of its servicing segment.

The company reported Q4 net income of $1M, down 99.1% from Q3, or $0.01 per share. This includes other mark-to-market of $58M and other items - $23M charge due to severance and property consolidation and $10M loss associated with equity investments. Excluding these items, adj. EPS was $0.89 vs. $0.70 consensus.

Revenue declined 40.6% sequentially to $303M, driven by a $56M MSR markdown and lower than forecast originations volumes.

The servicing portfolio ended Q4 with $870B in unpaid principal balance, up 23% Y/Y. Operational revenue from the servicing segment was $394M, up 4.5% from Q3 and 1% higher Y/Y.

Originations segment funded ~12.7K loans in Q4, totaling ~$3.2B UPB, with funded volume down 45% from Q3.

"Q4 performance put re-emphasized trends we've seen progressing throughout 2022; profitability bolstered by servicing performance offsetting a more challenged origination segment in the face of rising interest rates," said Jefferies analyst Kyle Joseph. He rates the stock Hold with $42 price target.

"Originations profitability continues to be challenged as a result of declining volumes," Joseph noted.

Earlier, Mr. Cooper ( COOP ) posted Q3 earnings beat as its servicing portfolio was strengthened by higher rates .

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