PMT - Pennymac Mortgage slides 9% after results Jones Research maintains Hold rating

• Pennymac Mortgage Investment Trust ( NYSE: PMT ) stock slid 8.7% to a three-week low as the REIT posted Q4 loss , while the Street was expecting a profit, hurt by negative fair value marks and higher interest expense.
• Jones Research reiterated its Hold rating as risk/reward of Pennymac Mortgage's ( PMT ) shares is more balanced now than ever.
• "Higher than expected interest costs, hedge losses, and lower than expected gains in the credit and agency mortgage portfolio were the primary drivers of the miss," said analyst Jason Stewart.
• Stewart said while the mortgage REIT is positioned to capitalize on mortgage credit opportunities, "we remain concerned with the valuation and potential equity impact of the mortgage servicing rights asset."
• Jones Research expects cash flow from MSR investments to remain steady in H1 2023.
• But it sees little upside to the MSR asset's fair value and sees the risk/reward to equity holders skewed negatively.
• Jones Research's neutral stance contrasts bullish sell-side ratings .

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