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Wells Fargo upgrades PennyMac Financial over favorable low-rate environment

Wells Fargo Securities analyst Michael Kaye upgraded PennyMac Financial Services as a favorable low-rate environment fuels refinancing volumes and gain-on-sale margins.

The analyst said PennyMac is one of the few financials "to own in this low rate backdrop." While the company is a top player in the correspondent lending channel, it still has room for growth in both the retail and broker channel. In retail, Kaye expects the company to grow its nonportfolio originations, and he noted that the company is "making good early traction" in the recently entered broker channel.

The analyst raised his rating to "outperform" from "market perform."