Onity Group, Inc. (ONIT) PT Raised to $60 at BTIG, 'We're surprised the stock isn't responding with more demand'

BTIG analyst Eric Hagen raised the price target on Onity Group, Inc. (NYSE: ONIT) to $60.00 (from $50.00) while maintaining a Buy rating.

The analyst comments "Bottom Line: We're surprised the stock isn't responding with more demand following the announcement alongside its earnings report that earnings visibility has stabilized enough to support a release of its valuation allowance, which we had only been giving it partial credit for up to this point. We're raising our price target another 20%, to $60, even though the guidance for GAAP return on equity this year is only in the low-double digits as a result of releasing the allowance. We think the stock has become much more compatible for M&A (both as a potential target, or a buyer of either another servicing platform or tech-enabled vendor) as a result of simplifying its operations and bringing leverage under tighter control. We see a highly active and dynamic playing field right now, where originators and servicers across the spectrum are reaching aggressively for scale and resources to keep pace in the tech race. We especially think PennyMac's (PFSI, Buy, $150 PT) acquisition of Cenlar for $257 million could help put context and transparency around the consolidation opportunity and valuations for scaled subservicers."

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