UPDATE: JMP Securities Downgrades Home Point Capital Inc. (HMPT) to Market Perform
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JMP Securities analyst Steven DeLaney downgraded Home Point Capital Inc. (NASDAQ: HMPT) from Market Outperform to Market Perform.
The analyst comments "Updating our earnings model with fresh adjusted net income (ANI) estimates ahead of the company’s upcoming first quarter 2022 results next month, we lower our rating to Market Perform from Market Outperform with a prior $5.50 price target on shares of Home Point Capital, Inc. (HMPT). In light of continued gain on sale (GOS) margin pressure and a lower national mortgage origination forecast, we reduce our 2022 and 2023 adjusted EPS estimates to $0.30 and $0.60, respectively, from $0.95/$0.90 as a result of lowered expectations for refinancing loan demand and further contraction of GOS margins due to a continued elevated level of competition for loans. A summary of our updated model can be found in Figure 3 at the end of this report. With our new estimates, our model now projects a GAAP ROCE of just 5.3% for 2022, rising to ~10% for 2023. As a reminder to our investor clients, “adjusted” earnings removes from GAAP earnings the noncash fair value marks on the company’s MSR portfolio in order to provide a clearer indication of on-the-run operating earnings. We believe the vast majority of the nine other analysts following HMPT use the adjusted earnings approach in developing their formal estimates as well. With shares currently trading at 10.4x our new 2022 adjusted EPS estimate of $0.30 and offering a 5.1% dividend yield, we view shares as reasonably fairly valued compared to the peer group medians of 6.5x and 1.9%, respectively, and consequently lower our investment rating to Market Perform."
Shares of Home Point Capital Inc. closed at $3.11 yesterday.
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