PFSI - PennyMac Financial cut to Equal Weight at Wells Fargo as rates drift up

Wells Fargo analyst Michael Kaye downgrades PennyMac Financial Services (PFSI) to Equal Weight from Overweight as the mortgage industry backdrop turns less favorable after the company's stock jumped 92% since the beginning of 2020."We are using this opportunity to take profits... The macro is becoming less supportive for companies levered to low  rates as interest rates are surging given inflation fears and an expected robust recovery," the analyst writes.The upward pressure on mortgage rates should lower refi opportunity, he adds.Reduces price target to $70 from $75.See PFSI stock performance in the past year vs. the S&P 500 in chart below.SA contributor Sheen Bay Research also sees PFSI facing refinance volumes trending to more normal levels this year.

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PennyMac Financial cut to Equal Weight at Wells Fargo as rates drift up