PFSI - PennyMac Financial nabs Buy rating at Jefferies on diversified business model

2023-07-17 10:21:01 ET

PannyMac Financial Services ( NYSE: PFSI ) stock perked up 1.6% in Monday morning trading after Jefferies started coverage with a Buy rating due to the real estate finance company's balanced business model split mainly between originations and servicing.

Over the medium-term, both segments are poised to be "substantially profitable," analyst Kyle Joseph contended, driving return on equity back to historical levels.

In addition to benefiting from higher interest rates, the note said, PFSI's scalable servicing business could see improved profitability in lower-rate environment "as originations shift from correspondent/broker to the higher-margin DTC channel via recapture."

Its originations segment, meantime, "is diversified on its own and has capitalized on market conditions to gain share in both the correspondent and broker channels."

Joseph's Buy rating diverges from the SA Quant system rating of Hold and aligns with the average Wall Street analyst rating of Buy.

More on PennyMac Financial Services:

• PennyMac: Hard Landing Of The Mortgage Refinance Market To Undermine Favorable Internal Factors
• The Prognosis For PennyMac

For further details see: