UPDATE: Morgan Stanley Reiterates On PHH On Revised Operating Estimates

In a report published Thursday, Morgan Stanley analyst Cheryl M. Pate reiterated an Equal-Weight rating on

, and raised the price target from $24.00 to $26.00. In the report, Morgan Stanley noted, “Following the completed Fleet sale, we revise our operating estimates higher on (1) a more aggressive pace of capital return from greater than expected buybacks, and (2) clarity on the path to enhance profitability in the mortgage business. While execution remains a risk and profitability levels in mortgage are likely to remain challenged in the near-term, we are increasing our price target by $2 to $26 given capital leverage from higher buybacks as well as increased comfort with PHH's move to re-orient the business. We expect the stock will re-rate higher over time as PHH executes on improving profitability, but normalized earnings are 2-3 years out.” PHH closed on Wednesday at $22.67.