UPDATE: Credit Suisse Initiates Coverage on PennyMac Financial Services with Neutral Rating, $24 PT on Attractive Growth Platform

In a report published Monday, Credit Suisse analyst Douglas Harter initiated coverage on

with a Neutral rating and $24.00 price target. In the report, Credit Suisse noted, “We are initiating coverage of PFSI with a Neutral rating and a $24 target price. We view PFSI as a leading platform in the nonbank servicing and origination sector. However, we currently see better value in our Outperform-rated servicers, NSM and WAC. We expect PFSI to grow its servicing portfolio to $284 billion by the end of 2015. This growth is primarily being driven by the growing originations volume and supplemented by acquisitions of MSRs. The growth of the servicing portfolio is a key driver of the expected growth of the retail originations channel through the recapture of refinanced loans. Gain-on-sale margins have continued to decline in the second quarter, albeit at a more moderate rate than in the first quarter. We expect GOS margins to continue to decline over the coming quarters as the market normalizes.” PennyMac Financial Services closed on Friday at $21.95.