BTIG has boosted its price target for Rithm Capital (RITM, Financial) from $13 to $16 while maintaining a Buy rating on its shares. The decision follows a positive assessment of the company's first-quarter performance. Analysts at BTIG highlight that Rithm Capital has demonstrated resilience, experiencing less downside recently compared to other asset managers and mortgage originators. This indicates a "more contained" risk associated with interest rates across its diverse business units.
The firm emphasizes Rithm Capital's strategic position to capitalize on potential acquisitions. With market valuations dipping, the company could benefit from substantial scale advantages. Analysts remain optimistic about the firm's growth trajectory, seeing significant opportunities for strengthening its market footing in upcoming periods.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 10 analysts, the average target price for Rithm Capital Corp (RITM, Financial) is $13.10 with a high estimate of $14.00 and a low estimate of $12.50. The average target implies an upside of 25.36% from the current price of $10.45. More detailed estimate data can be found on the Rithm Capital Corp (RITM) Forecast page.
Based on the consensus recommendation from 11 brokerage firms, Rithm Capital Corp's (RITM, Financial) average brokerage recommendation is currently 1.7, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Rithm Capital Corp (RITM, Financial) in one year is $8.31, suggesting a downside of 20.48% from the current price of $10.45. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Rithm Capital Corp (RITM) Summary page.
RITM Key Business Developments
Release Date: February 06, 2025
- Permanent Capital: $7.8 billion.
- Assets Under Management (AUM): $80 billion combined for Rithm and Sculptor.
- Balance Sheet: $45 billion for Rithm.
- Full Year GAAP Net Income: $835 million or $1.67 per diluted share.
- Return on Equity (Full Year): 14%.
- Earnings Available for Distribution (Full Year): $1,050 million or $2.10 per diluted share.
- Dividend Yield: 9.2%, with $1 paid per common share annually.
- Fourth Quarter GAAP Net Income: $263 million or $0.50 per diluted share.
- Return on Equity (Q4): 16%.
- Earnings Available for Distribution (Q4): $316 million or $0.60 per diluted share.
- Book Value: $12.56 per share, unchanged from the prior year.
- Genesis Capital Origination: $3.6 billion in 2024.
- Genesis Capital EBITDA: Approximately $100 million.
- Newrez Pretax Income (Q4): Approximately $280 million, 20% ROE.
- Newrez Full Year Pretax Income: Approximately $1 billion, 19% ROE.
- Total Servicing Portfolio: $844 billion.
- Funded Volume (2024): $59 billion.
- Origination Margins (Q4): 131 basis points, up 8 basis points quarter over quarter.
- Origination PTI (Q4): $96 million, up 19% from last quarter.
- Owned MSRs: $525 billion directly serviced by Newrez.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Rithm Capital Corp (RITM, Financial) reported a strong fourth quarter and full year 2024, with significant earnings growth and a robust balance sheet.
- The company has successfully expanded its asset management business, notably through the acquisition of Sculptor, which has shown excellent performance.
- Rithm Capital Corp (RITM) has a diversified product offering across various asset classes, including real estate and credit, which positions it well for future growth.
- The company is planning to launch a global energy infrastructure platform, which could provide new growth opportunities.
- Newrez, a subsidiary of Rithm Capital Corp (RITM), delivered strong financial performance with significant growth in servicing and origination volumes.
Negative Points
- Rithm Capital Corp (RITM) acknowledges that its equity is undervalued, trading below its perceived intrinsic value.
- The company is still evaluating changes to its capital structure, which could impact its operations and shareholder value.
- There is uncertainty regarding the potential listing of Newrez, with no definitive timeline provided.
- The company faces competitive pressures in the non-QM and home equity loan markets, which could impact its market share.
- Rithm Capital Corp (RITM) is operating in a challenging macroeconomic environment with elevated interest rates and affordability issues affecting the housing market.
