Keefe, Bruyette & Woods Downgrades PennyMac Financial (PFSI) to Market Perform
Keefe, Bruyette & Woods analyst George Bose downgraded PennyMac Financial (NYSE: PFSI) from Outperform to Market Perform with a price target of $102.
The analyst commented, "PFSI currently trades at ~1.45x book value and COOP trades at ~1.35x book value; the only time each company's price/book multiples exceeded these respective levels was during the COVID-driven mortgage boom, which drove ROEs in the sector to record highs. While we think ROEs could increase, we see only limited upside unless interest rates fall far more meaningfully than we currently expect."
"While the operating outlook for both companies remains strong, we believe the recent rally in shares is not supported by fundamentals, as the fairly modest move in rates is unlikely to have any meaningful impact on earnings and we expect only modest tightening of mortgage spreads from current levels through 2026."
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Shares of PennyMac Financial closed at $101.09 yesterday.