PFSI - PennyMac Financial cut to Market Perform at JMP after recent rally

• JMP analyst Trevor Cranston on Wednesday downgraded mortgage banker PennyMac Financial Services ( NYSE: PFSI ) stock to Market Perform from Market Outperform after its roughly 50% rally since Sept. 30 could mean limited upside from here.
• Cranston sees PFSI as fairly valued with shares currently trading at ~10 times 2023 EPS and 94% of book value, compared with peers Rithm Capital ( RITM ) and Mr. Cooper Group ( COOP ) trading at 74% and 79% of book value, respectively.
• PFSI edged down 0.5% in premarket trading.
• Taking into account the company's stronger-than-expected Q3 results along with tough market conditions, the analyst lifted his 2022 EPS estimate to $8.95 from $6.40 versus the $6.52 consensus. 2023 EPS is expected to be $6.50, trailing the $6.82 consensus, compared with $6.40 in the prior estimate.
• His revised 2023 estimate would generate an ~10% return on equity for PFSI, reflecting the company's "balanced business model with the servicing portfolio generating solid returns in challenging origination markets," he wrote in a note.
• Last month, (Dec. 6, 2022) PennyMac upgraded to Overweight at Wells Fargo as mortgage rates improve .

For further details see: