Rithm Capital price target raised to $12.50 from $10.50 at Piper Sandler

Piper Sandler raised the firm’s price target on Rithm Capital to $12.50 from $10.50 and keeps a Neutral rating on the shares. The firm notes Rithm produced a strong operating result in Q1 as higher servicing revenue and gain on sale revenue drove EAD to 48c vs. its 35c estimate and consensus at 39c. Piper believes the company can generate an earnings run rate between 40c-50c per share during 2024 with an improving runway in 2025 as Sculptor becomes accretive to earnings. In addition, the firm sees further upside in its 2025 estimates in the NewRez segment as banks continue to pull back from the market, with Rithm recording a 33% quarter-over-quarter increase in lock volume. Ultimately, Piper believes these structural shifts could lead to better multiples on the segments, particularly ones with larger fee-based revenue streams.