RITM Stock Forecast & Price Target

Rithm Capital Corp is positioned for a promising future, with estimates indicating a slight increase in core earnings to $2.20 and an expected rise in year-end book value to $13.23 for FY25. The company's outlook is bolstered by stable mortgage rates and healthy consumer balance sheets, which are likely to enhance the growth potential of its mortgage servicing rights (MSR) portfolio. Furthermore, the ability to capitalize on a robust investment pipeline, particularly in a favorable interest rate environment, could lead to significant upside potential.

Rithm Capital's financial outlook remains negative due to anticipated leverage declining to 3.2x by year-end and maintaining stability through 2026, potentially limiting its financial flexibility. The consistent decline in agency prepayment speeds suggests challenges in mortgage servicing rights (MSR) valuations, indicating sluggish turnover that negatively impacts the company's revenue generation capabilities. Additionally, in a scenario marked by sharply higher interest rates and mortgage spreads, the company's book value and liquidity position could face increased risks, reflecting a challenging operating environment.