RITM Stock Forecast & Price Target

Rithm Capital Corp exhibits positive growth dynamics, highlighted by an increase in assets under management (AUM) to $37 billion, driven by robust performance in credit and real estate sectors. The company reported a moderate rise in owned unpaid principal balance (UPB) to $597 billion, alongside consistent origination volume of $16.4 billion, indicating resilience in its operational activities and an expanding platform. Additionally, core earnings for FY25 are anticipated to rise modestly to $2.20, with a year-end book value projected to reach $13.23, reflecting a strengthening balance sheet and improved financial health.

Rithm Capital Corp faces a negative outlook primarily due to its total revenues of $965 million falling short of the estimated $1,125 million, largely driven by lower-than-expected net servicing revenue. The company's leverage is projected to decline to 3.2x by year-end and stabilize thereafter, which may not adequately support its investment portfolio in a challenging interest rate environment. Additionally, rising agency MBS purchases by the Federal Reserve could trigger lower mortgage rates and increased prepayment activity, potentially compressing net interest margins and negatively impacting earnings and MSR valuations.