Ocwen Financial Shares Get Crushed, Bank Of America Downgrades

Shares of Ocwen Financial Corp OCN were nearly 7 percent lower in the pre-market session.

Amid the drop, Bank of America analyst Kenneth Bruce issued a note downgrading the company's shares from Buy to Neutral and slashed the price target from $35 to $23.

Bruce commented, "The evolving NY DFS inquiry into OCN continues to highlight regulatory scrutiny of the company, along with the broader oversight of non-bank services, reducing our confidence in OCN's ability to reverse near-term operating trends."

The trends Bruce mentioned are "elevated costs" and stalled loan resolutions, both of which he believes can be fixed. However, he doesn't see that happening until 2016.

In light of this, Bruce has lowered his 2014 and 2015 EPS estimates from $2.59 and $3.85 to $1.82 and $1.53, respectively.