UPDATE: Jefferies Initiates Coverage on Nationstar Mortgage Holdings with Hold Rating, $40 PT on Near-Term Risks

In a report published Friday, Jefferies analyst Daniel Furtado initiated coverage on

with a Hold rating and $40.00 price target. In the report, Jefferies noted, “While we are positive on the NSM platform and long-term strategy, we see risks near term as HARP volumes dominate the profitability of the company. As HARP pay-ups decline as rates rise, we see near-term risks to GoS margins. With a majority of profits from originations, NSM's earnings are driven by rate-sensitive volumes/margins, warranting a discount to comps. Our PT of $40 is 6x our FY'14 EPS estimate of $6.67.” Nationstar Mortgage Holdings closed on Thursday at $38.16.