Altisource more than doubles 1Q earnings
Altisource Portfolio Solutions (ASPS) more than doubled its first-quarter income as revenue rose 45% from a year earlier. The Luxembourg-based company, which provides services and technology for real estate and mortgage portfolios, earned $14.8 million, or 57 cents a share, up from $6.3 million, or 25 cents a share, a year earlier. Revenue for the quarter increased to about $88.7 million from nearly $61 million the prior year. Altisource said earnings for the three months ended March 31 rose mostly on the back of new mortgage services and the growth of Ocwen Financial's (OCN) servicing portfolio in 2010. Altisource was spun off from Ocwen in August 2009 and the company remains Altisource's largest customer. Ocwen substantially expanded its residential loan portfolio in 2010 by acquiring HomEq Servicing from Barclays Bank. Analysts at investment-banking firm Stephens Inc. said Altisource's earnings came in slightly lower than expected. Stephens projected the company would earn 58 cents to 61 cents a share for the quarter on revenue of $89.3 million to $93.7 million. "Revenue timing around the HomEq acquisition and a weak REO sales environment pressured the top line," according to Stephens. "However, we believe that the six- to nine-month lag on REO sales from the HomEq acquisition, coupled with a spring selling season lift and continued new product rollouts, will drive strength" in the second quarter and rest of 2011. Stephens said mortgage services revenue of $59.7 million for the quarter was "a little light" despite climbing 84% from $32.4 million a year earlier. Analysts said Altisource is capable of rapidly expanding its mortgage unit if Ocwen purchases more servicing rights. "Additionally, new products in title and non-legal back office will help to further expand revenue penetration within (Ocwen)," the analysts said. Stephens maintained an overweight rating on Altisource with a target stock price of $36. Write to Jason Philyaw.