RITM Stock Forecast & Price Target

Rithm Capital Corp has demonstrated continued growth in assets under management, reaching $37 billion, indicating a strong performance in both credit and real estate sectors. Additionally, the improvement in book value per share to $12.83, coupled with an estimated increase in core earnings to $2.20 for FY25, reflects the company's ability to generate robust financial returns. The growth in mortgage servicing rights and third-party servicing further supports a positive outlook by enhancing the company's investment portfolio and operational capabilities amidst varying interest-rate environments.

Rithm Capital Corp faces a negative outlook due to declining leverage projected to reach 3.2x by year-end and remain stable through 2026, indicating potential challenges in maintaining growth and profitability. Additionally, the company's total revenues of $965 million fell short of estimates by $160 million, primarily attributed to lower-than-expected net servicing revenue and significant amortization losses. The current environment of falling agency prepayment speeds, coupled with volatility in mortgage markets, may lead to increased prepayment activity, further compressing net interest margins and negatively impacting overall earnings and asset valuations.