RITM Stock Forecast & Price Target

Rithm Capital Corp has demonstrated strong growth with assets under management (AUM) increasing to $37 billion, alongside a significant rise in third-party servicing, which grew by 405 basis points quarter-over-quarter to $282 billion. The company reported a rise in its mortgage servicing rights (MSR) portfolio and improved book value per share (BVPS), moving from $12.71 to $12.83, indicating financial stability and potential for growth. Projections for fiscal year 2025 estimate core earnings to increase to $2.20 and year-end book value to reach $13.23, reinforcing the positive outlook on the company's financial performance amidst varying interest rate environments.

Rithm Capital Corp faces a negative outlook primarily due to its inability to meet revenue expectations, reporting total revenues of $965 million, significantly below the estimated $1,125 million, largely attributed to lower net servicing revenue and unfavorable fair value losses. Additionally, the company's valuation of mortgage servicing rights (MSRs) is under pressure from declining agency prepayment speeds, which may hinder turnover and create further challenges if mortgage rates decline, potentially leading to increased prepayments and compressing net interest margins. Lastly, periods of illiquidity in the mortgage markets could restrict secured borrowing arrangements, further impacting capital availability and undermining overall financial stability.