Compass Point analyst Kevin Barker reiterated a Buy rating and raised his price target on Flagstar Bancorp (NYSE: FBC) from $21 to $23 citing several near-term catalysts. The stock was also added to Compass Point's Focus List.
The price target hike take into account higher estimates for book value recovery following the rep/warrants settlement with Freddie Mac and higher fair value (or gains) on mortgage servicing rights.
"With this settlement, FBC has effectively settled the vast majority of rep/warrants claims from the GSEs and screens as having excess rep/warrants reserves," Barker said. "In addition, we expect the company to report either a gain on sale or at least a material markup in the fair value of its mortgage servicing rights during fourth quarter earnings."
He adds, "These two events, should put the company in a better position to report positive earnings in the face mortgage banking headwinds and potentially release the valuation allowance on the deferred tax assets."
The firm is moving 4Q13E GAAP EPS to $0.53 from $1.17 and operating EPS to $0.09 from $0.02. They are also adjusting our FY14E GAAP EPS to $0.89 from $0.44, FY14E operating EPS to $0.54 from $0.08 and FY15E EPS to $0.94 from $0.66.
For an analyst ratings summary and ratings history on Flagstar Bancorp click here. For more ratings news on Flagstar Bancorp click here.
Shares of Flagstar Bancorp closed at $19.73 yesterday, with a 52 week range of $12.29-$19.88.
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