Ocwen Financial Analyst Roundup

Ocwen FinancialOCN continued to decline by 1.04 percent going into the Tuesday session, following regulatory issues pertaining to affiliated entities over force-placed-insurance.

The stock recently traded up 0.44 percent, however, at $27.10

Bank of America - reiterated a Buy, price target lowered from $54 to $35:

“While banks remain burdened by delinquent mortgages and are motivated to sell servicing assets, the relief valve of servicing transfers to non-banks is becoming more challenging given heightened regulatory friction and legal risk. However, given the substantial opportunity for growth in mortgage servicing, we think investors will be more constructive on OCN as the regulatory environment improves. That said, OCN should benefit from better sentiment and share valuation, as independent servicers gain share and servicing is again viewed as a mainstream investment opportunity”

Compass Point - lowered from Buy to Neutral, price target lowered from $34 to $29:

“We originally upgraded the stock to a Buy from Neutral under the assumption that impact of the National Mortgage Settlement was limited and the scrutiny from the NY Department of Financial Services (NY DFS) would be short-lived. We obviously under-estimated the amount of scrutiny the company would incur and the structural changes to the company's cost base that would follow. Meanwhile, the NY DFS has increased the pressure over the entire OCN eco-system and the risk to even higher expenses from where we are now or even a bigger change to the overall company's operations is significant.”

Oppenheimer - lowered from Outperform to Perform:

“On 8/4 NY Department of Financial Services Superintendent, Benjamin Lawsky publicly released a new letter he sent to Ocwen. This letter focuses on potential forced-place insurance conflicts and shows that the superintendent is pursuing OCN with considerable vigor. To us, it indicates that little progress has likely been made in resolving the issues between OCN and the NYDFS and that the overhang will remain for much longer than we had anticipated. Thus, we are removing all MSR acquisitions (the benefit of having this overhang removed) from our model between now and YE15. The impact is that our 2015E EPS goes from $4.02 to $2.50 and thus we are downgrading shares to perform and removing our price target.”

Analysts are cautious of regulatory issues, and while Bank of America thinks that a value opportunity has presented itself, Oppenheimer decided that a price target may no longer be relevant in light of recent events.

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Posted In: NewsTerminationDowngradesPrice TargetLegalManagementAnalyst RatingsBank of AmericaCompass PointOppenheimer
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