PennyMac Financial upgraded to Outperform from Market Perform at Keefe Bruyette

Keefe Bruyette upgraded PennyMac Financial to Outperform from Market Perform with a price target of $81, up from $77. The analyst says the higher interest rate environment is likely to put incremental pressure on origination volumes but bolster servicing returns. The move in rates should result in stronger long-term earnings from mortgage servicing and positive servicing rights markets, the analyst tells investors in a research note. The firm thinks PennyMac can generate attractive return on equity even if the contribution from mortgage origination remains modest.