Morgan Stanley has initiated coverage on PHH Corp., Mt. Laurel, N.J., the nation's 10th largest residential servicer, saying the company is undervalued. In research note Morgan analyst Ken Posner said, "The stock seems to be discounting an implausibly tough scenario where the housing market suffers from flat home prices and falling sales." Morgan has given the company an "overweight" rating, establishing a price target of $38. PHH currently trades at $27. In recent weeks PHH has been slapped with a handful of civil action suits which claim the company and its executives made false statements about its finances. On March 3 the company canceled its fourth quarter earnings release, and delayed its 10-K filing. Upon the news its share price fell 11% on the day, but has since recovered somewhat.

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