PennyMac Financial stock rating reiterated at Outperform by KBW

Investing.com - Keefe, Bruyette & Woods (KBW) has reiterated its Outperform rating and $117.00 price target on PennyMac Financial (NYSE:PFSI).

KBW analyst Bose George maintained the positive outlook following meetings with PennyMac’s management team, which included CEO David Spector, CFO Dan Perotti, and SVP of Investor Relations Isaac Garden.

The investment firm believes PennyMac Financial is "well positioned to grow its GAAP ROE as hedging results improve," with this improvement expected to be driven by strategic changes implemented during the second quarter.

KBW views the company as offering "a combination of attractive current returns with upside optionality if rates decline," suggesting potential additional benefits in a falling interest rate environment.

The firm maintained its Outperform rating on PennyMac Financial stock, indicating continued confidence in the company’s performance relative to the financial services sector.

In other recent news, PennyMac Financial Services Inc. reported its second-quarter earnings, which fell short of analysts’ expectations. The company announced an earnings per share (EPS) of $2.54, missing the forecasted $2.88, and reported revenue of $444.73 million, which was below the anticipated $545.04 million. In addition to the earnings report, PennyMac Financial has priced a $650 million offering of senior notes due in 2034 with an interest rate of 6.750%. The notes are expected to mature on February 15, 2034, with interest payments starting on February 15, 2026.

The company intends to use the proceeds from this offering to repay borrowings under its secured MSR facilities and other secured indebtedness, as well as for general corporate purposes. Meanwhile, Piper Sandler has lowered its price target for PennyMac Financial to $121 from $125, maintaining an Overweight rating on the stock. This adjustment follows the company’s operating miss in the second quarter, primarily due to lower gain on sale income, partially offset by higher servicing fees. These developments come amid PennyMac Financial’s strategic financial adjustments and market evaluations.

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