UPDATE: Piper Jaffray Initiates Coverage on PennyMac Financial Services with Overweight Rating, $18 PT as Stock is Positioned For Share Gains

In a report published Friday, Piper Jaffray analyst Jason S. Deleeuw initiated coverage on PennyMac Financial Services (NYSE: PFSI) with an Overweight rating and $18.00 price target.In the report, Piper Jaffray noted, “We are initiating on PFSI with an Overweight rating and an $18 one-year price target, offering 24% potential upside. PFSI's shares are -17% YTD vs. the S&P 500/mortgage banking peer group at +6%/-11%. PFSI operates a scalable mortgage banking platform that we expect will continue to take market share in correspondent mortgage origination and prime mortgage servicing. We forecast PFSI's origination volume to post y/y growth in the 4Q14 as it laps the massive refinance volume decline and continues to capture a greater volume share from its existing correspondent network. Continued market share gains and growing origination volume are the catalysts we see to drive PFSI's relative valuation (P/E and P/BV) closer to its mortgage banking peers. Our $18 price target is based on 8.5x our 2015 EPS estimate of $2.15 and 1.5x our year-end 2015 book value estimate of $12.00.”PennyMac Financial Services closed on Thursday at $14.31.