Compass Point Downgraded Nationstar Mortgage Citing "Noisy" Q4

In a report published Thursday, Compass Point Research & Trading analyst Kevin Barker downgraded

from Buy to Neutral and lowered the price target from $42 to $41. Compass Point commented, "In the near-term, we believe the fourth quarter could be noisy as the company takes losses on its origination business due to lower gain on sale and origination volumes. Meanwhile, increasing profitability from the servicing segment and SolutionStar likely won't be strong enough to offset these headwinds. Over the long-term, we remain long-biased given the company should see increasing profitability from the servicing segment and there is the potential the company could lower its tax base through a move to a more tax-friendly location." Barker noted that the price target reduction is a direct result following the financing deal between Nationstar and New Residential. The analyst lowered FY14 and FY15 estimated EPS from $5.40 to $5.00 and $5.60 to $5.25, respectively. Nationstar Mortgage closed at $41.28 on Wednesday. Shares are currently trading down 3.29% at $39.92.