In an investors note, the Stevens Company said analysts remain equal-weight on shares of Altisource (ASPS) and are lowering their target to $85 from $95, based on the assumption that Ocwen Financial Corp (OCN) will purchase another $100 billion of subprime mortgage servicing rights’s in the near future.
“While we believe ASPS is an exceptionally well run business and that management will continue to identify and create value, we do not believe that applying an arbitrary ‘peak’ multiple to potential 2014 EPS is the best way to value the business given the runoff nature of a majority of current earnings,” said analyst Carter Malloy of Stevens Company.
The 2013 adjusted earnings per share was revised downward from $7.14 to $6.48 to reflect slowing onboarding of recent Ocwen wins, coupled with increased investments in the business and new amortization expense.
Additionally, the 2014 adjusted earnings per share of $8.69 is also below current estimates, built on assumptions of Homeward Residential and Residential Capital being on-boarded in 2013, additional government-sponsored enterprise loans coming on to the REALServicing platform next year and other initiatives continuing to grow at a rapid pace.
