This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
$1 buys you full access to ALL of TheStreet's Subscription Services! Learn More

Analysts Still Love Nationstar After 17% Drop (Update 2)

Stocks in this article: NSMSGMOCN

Miller in a client note lowered his 2014 EPS estimate for Nationstar to $5.00 from $7.50.

Miller sees plenty of opportunity for Nationstar to unlock more value for investors by "creating more tax efficient capital vehicles" or through a spinoff of Solutionstar.

Credit Suisse analyst Douglas Harter also maintained an "outperform" rating on Nationstar, while lowering his price target to $46 from $62. "Our target price represents a 9.6x multiple on 2014 EPS estimate based on sum of the parts for servicing, originations, and Solutionstar," Harter wrote in a note to clients. He emphasized that his price target really is a 12-month target, since "Nationstar will need to execute improving servicing cash flows and progress on a Solutionstar spin before we see upside to the stock."

Other Opinions

Sterne Agee analyst Henry Coffee on Friday downgraded Nationstar to a "neutral" rating from a "buy" rating, while lowering his price target to $45 from $60. Coffee estimates Nationstar will earn $5.00 a share in 2014.

"We are stepping to the sidelines to wait while the company reconfigures its operating platform to adjust to new origination targets, the closing of excess facilities, etc.," Coffee wrote.

But even after the downgrade, Coffee struck a somewhat positive tone.

"In addition to the prospects of additional new servicing, there are two other factors that could drive the shares higher: a) reduction in corporate debt. The company needs to evolve into a business that can grow revenue and EPS without increasing leverage; b) a reconfiguration of the servicing business into a structure that lowers the serving company's tax rate from 38% to an estimated 10%. The first item is critical in our view; the second worth noting," Coffee wrote.

Morgan Stanley analyst Cheryl Pate on Friday downgraded Nationstar to "equal-weight" from "overweight," with a price target of $38.

"Lower profitability in the originations business is the key driver to our reduced 2014e EPS of $4.30," Pate wrote in a note to clients. That's the lowest 2014 EPS ratio among the analysts listed here.

"We expect continued pressure on gain on sale margins, partially offset by a higher consumer mix, and lower overall volumes with the sale to Stonegate. Additionally, we think it will take some time to get to the 125bps of core pre-tax profitability in originations that management targets as the cost base is right-sized," Pate wrote.

NSM Chart NSM data by YCharts

Interested in more on Nationstar Mortgage Holdings? See TheStreet Ratings' report card for this stock.

-- Written by Philip van Doorn in Jupiter, Fla.

>Contact by Email.

Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for TheStreet.com Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.
3 of 3

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,802.31 -12.63 -0.07%
S&P 500 2,067.24 +0.21 0.01%
NASDAQ 4,764.8020 +6.55 0.14%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs