UPDATE: Compass Point Reiterates Buy Rating, Raises PT on Home Loan Servicing Solutions After 4Q12 Earnings

In a report published Monday, Compass Point reiterated its Buy rating on Home Loan Servicing Solutions

, and raised its price target from $22.00 to $25.00. Compass Point noted, “We believe HLSS remains an attractive investment for yield oriented investors as the company executes on its objective to provide attractive and consistent risk-adjusted total returns to shareholders. The partnership with Ocwen (OCN-Buy, $44 PT, Barker) and strategic transition of servicing to specialty servicers from banks should provide a long runway for portfolio growth at HLSS. In addition, OCN's consistent servicing track record and improvements in capital market conditions should lead to lower funding costs and increased leverage on the liability side of HLSS's balance sheet. With a portfolio comprised of all non-Agency loans (the majority with interest rates of just over 5%), prepayment risks are muted. Our price target of $25 represents a multiple of 1.6x book value per share (BVPS) and an expected dividend yield of 7.0%. If achieved, our $25 price target represents a total return opportunity of 20%.” Home Loan Servicing Solutions closed on Friday at $21.95.