UPDATE: Bank of America Merrill Lynch Reiterates Buy Rating, Raises PT on Ocwen Financial Corporation

In a report published Monday, Bank of America Merrill Lynch reiterated its Buy rating on Ocwen Financial Corporation OCN, and raised its price target from $25.00 to $32.00. Bank of America Merrill Lynch noted,“We remain constructive on Ocwen Financial, despite the 45% gains achieved in Q3'12, as there are a number of catalysts that we believe are likely to support a favorable EPS growth outlook and bolster sentiment for the stock. Specifically, we anticipate a meaningful reduction in OCN's tax rate to drive a positive estimate revision cycle in the near-term. On a longer-term basis, we think OCN will be revalued higher in anticipation of the transformation to a more ‘capital-light' servicing model that will untether capital to support accelerated servicing portfolio growth or a buyback, which would further support a prolonged earnings growth outlook. The stock will likely prove more sensitive to headline issues, as it could be prone to profit-taking on negative news. However, we think investors will be rewarded, as visibility into the secular opportunity in non-bank servicing develops. Reiterate Buy rating.” Ocwen Financial Corporation closed on Friday at $27.41.