RITM Stock Forecast & Price Target

Rithm Capital Corp has demonstrated strong growth in assets under management (AUM), rising to $37 billion, while the company's owned unpaid principal balance (UPB) increased to $597 billion, indicating a steady expansion in its servicing capabilities. The company maintains a solid origination volume of $16.4 billion and anticipates slight increases in core earnings and year-end book value for FY25, projecting core earnings of $2.20 and a book value of $13.23. Additionally, the improvement in book value per share (BVPS) to $12.83 from $12.71 illustrates a positive trend in the company's financial health, reinforcing a favorable outlook.

The financial outlook for Rithm Capital Corp appears negative due to several fundamental factors, including a significant revenue miss of $965 million compared to estimates of $1,125 million, primarily driven by lower-than-expected net servicing revenue and substantial losses from fair value adjustments. Additionally, the potential for elevated prepayment activity, coupled with falling agency prepayment speeds, may compress net interest margins and negatively impact MSR valuations, further straining the company’s financial performance. Furthermore, anticipated periods of illiquidity in the mortgage markets could hinder access to secured borrowing arrangements, exacerbating vulnerabilities in the company's capital structure as leverage is expected to decline to 3.2x and remain flat through 2026.