RITM Stock Forecast & Price Target

Rithm Capital Corp demonstrates a solid financial foundation, with a notable increase in assets under management (AUM) reaching $37 billion, alongside a consistent origination volume of $16.4 billion, indicating stable operational performance. The company's owned unpaid principal balance (UPB) increased to $597 billion, and its mortgage servicing rights (MSR) portfolio saw a rise of 30 basis points quarter-over-quarter, reflecting effective management amidst fluctuating interest rates. Furthermore, the projected growth in core earnings to $2.20 for FY25 and an increase in year-end book value to $13.23 underline the firm's ability to deliver strong risk-adjusted returns.

Rithm Capital Corp's negative outlook is driven by a significant miss in total revenues, reported at $965 million compared to the estimated $1,125 million, largely attributed to lower-than-expected net servicing revenue and substantial amortization losses. Additionally, the reduction in agency prepayment speeds, which have been decreasing in recent times, poses further challenges as it may lead to compressed net interest margins and decreased valuations in mortgage servicing rights (MSRs). Lastly, potential periods of illiquidity in the mortgage markets may restrict access to secured borrowing arrangements, adversely affecting the company's financial flexibility and overall performance.