RITM Stock Forecast & Price Target

Rithm Capital Corp experienced a sequential increase in book value per share (BVPS), rising 203 basis points to $12.56, primarily due to higher than expected pretax income and a notable 11% decline in mortgage servicing rights (MSR) marks. The company’s MSR portfolio grew significantly, achieving a total unpaid principal balance of $590 billion, alongside fair value gains that elevated MSR holdings to $10.3 billion. Furthermore, projected operating earnings per share (EPS) for 2025 and 2026 have been revised upward to $1.94 and $2.07, respectively, supported by increases in management fees, performance fees, and asset management revenue, indicating a positive growth trajectory for Rithm Capital.

Rithm Capital faces significant risks that could adversely impact its earnings potential and dividend-paying capability. Elevated prepayment activity, driven by fluctuating mortgage rates, may compress net interest margins and diminish the valuations of mortgage servicing rights, while potential liquidity issues in the mortgage markets could further hinder access to secured borrowing. Additionally, rising short-term interest rates pose a threat by increasing funding costs and creating volatility in net equity value, ultimately affecting returns to common shareholders.