UBS Downgrades Home Point Capital Inc. (HMPT) to Neutral
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UBS analyst Brock Vandervliet downgraded Home Point Capital Inc. (NASDAQ: HMPT) from to Neutral with a price target of $7.00 (from $9.00).
The analyst comments "We downgrade HMPT to Neutral. Mortgage fundamentals, particularly gain-on-sale (GOS) dynamics in the wholesale channel, are under heavy pressure. Mgmt reported April originations were nearing breakeven, a level we did not expect HMPT to reach. This implies pricing well below levels seen in 2019, previously considered a "floor" for GOS.
Aside from the fall-off in GOS, we are uncertain about the duration of correction and the timing/magnitude of price recovery. Excess capacity may cause pricing to remain under pressure for multiple quarters, driving profitability below sustainable levels. While HMPT is acting proactively to reduce opex, we have limited visibility into the company's ability to execute and protect revenue and EPS growth over the medium-term. We are materially reducing our EPS forecasts again. Despite the underperformance of the stock, we see shares as fairly valued at ~5.5x our revised '22E EPS."
Shares of Home Point Capital Inc. closed at $6.63 yesterday.
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