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On Monday, BTIG analysts reaffirmed their Buy rating for Rithm Capital Corp. (NYSE:RITM), maintaining a $16.00 price target. The analysts highlighted the company’s estimated net asset value (NAV) at $12.70 per share and projected distributable earnings of $0.51 for the second quarter and $2.20 for the full year 2025.
Rithm Capital is noted as a preferred investment for those interested in turnaround and growth opportunities in asset management. Trading at 9.2x earnings and offering an impressive 9% dividend yield, which has been maintained for 13 consecutive years according to InvestingPro, the stock presents potential for higher returns, especially if interest rates decrease, according to BTIG analysts.
The analysts expressed particular optimism about Rithm Capital’s efforts to expand its wholly-owned residential and commercial transitional lending business, Genesis Capital. This expansion is seen as a strategic move to capitalize on the momentum of "private credit" investing in asset-based finance, which is gaining significance as non-banks and specialty lenders become more adept at handling diverse market situations compared to traditional commercial banks. The company’s revenue growth of 10.5% in the last twelve months supports this strategic direction.
Some investors have described Rithm Capital as a "complicated" investment due to its diverse and opportunistic business model, including the integration of Genesis Capital. However, BTIG analysts argue that this complexity adds value, particularly as it aligns with the company’s strengths in real estate and structured credit.
Overall, BTIG’s reaffirmation of the Buy rating and price target underscores their confidence in Rithm Capital’s strategic direction and growth potential in the current market environment.
In other recent news, Rithm Capital Corp. reported its first-quarter 2025 earnings, exceeding expectations with an earnings per share (EPS) of $0.52, compared to the forecasted $0.47. However, the company’s revenue fell short of projections, coming in at $768.38 million against the anticipated $1.24 billion. Piper Sandler upgraded Rithm Capital’s stock rating to Overweight, raising the price target to $14.00 from $12.50, citing strong servicing fee income and a robust return on equity. The firm highlighted Rithm’s diversified business model and its potential for high returns, suggesting a 40%+ total return over the next 12 months.
Additionally, Rithm Capital disclosed the results of its 2025 Annual Meeting of Stockholders, where two Class III directors were elected, and Ernst & Young LLP was ratified as the independent auditor for the year. Piper Sandler also noted Rithm’s resilience in the current interest rate environment and its plans to enhance shareholder value through strategic initiatives, including a potential spin-off of its mortgage business, Newrez. These developments reflect Rithm’s strategic focus on mortgage servicing and asset management expansion. The company’s strong position as a top U.S. mortgage servicer is expected to support its performance amidst fluctuating interest rates.
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