Assuming rates remain stable in the first quarter, says FBR, PHH Corporation (NYSE:PHH) has set itself up for a strong first quarter after a record $49 billion in mortgage originations in the fourth quarter.
FBR says, "On a core basis, PHH missed our estimate because of lower gain-on-sale margins. On a positive note, mortgage originations were a record $49B for the year, implying about $18.5B of originations for 4Q10. At this level, PHH would have taken about 3.2% of the mortgage origination market share in 2010. This should set PHH up for a good quarter in 1Q11 if rates remain stable; this highlights PHH's ability to successfully maintain strong volumes in what is expected to be a tough mortgage market in 2011. We are adjusting our 4Q10 EPS estimate to $3.26 on a GAAP basis and $0.31 following the announcement, but will wait until we get a full release to reassess our FY11 numbers."
FBR Capital maintains an 'Outperform' on PHH Corporation (PHH), which closed Thursday at $24.40, gaining $0.08, or 0.33 percent. FBR has a price target of $28 on PHH.
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