Compass Point Reiterates Buy on Stonegate Mortgage (SGM) Following Announced CEO Resignation

Compass Point reiterated a Buy rating and $11.00 price target on Stonegate Mortgage (NYSE: SGM) following the company's announcement that Jim Cutillo, the founder and CEO, would be resigning from the company effective September 10.

Analyst Kevin Barker commented, "Stonegate Mortgage (SGM) announced Jim Cutillo, the founder and CEO, would be resigning from the company effective September 10. Richard Kraemer, Chairman of SGM, has been named interim CEO and James Smith was named President and COO. Mr. Smith will be responsible for all of the company's operations. Mr. Cutillo will remain under contract as a consultant for the next six months."

Barker also added, "The resignation of Mr. Cutillo should not come as a surprise given the company has struggled to report positive earnings and the stock has fallen close to $6 per share after raising equity in a private offering at $18 and issuing stock to the public in an IPO at $16 in 2013. The stock recently fell to ~60% of TBV after the company reported a $0.04/share operating loss in the second quarter in what is typically one of the stronger quarters for mortgage originators. Mr. Cutillo started SGM in 2005 after a stint at GMAC between 2002 and 2004. Mr. Kraemer (age 71) served as Chairman of Saxon Capital between 2001 and 2006, before it was sold to Morgan Stanley for $706mm. Mr. Smith also served in executive leadership roles at Saxon Capital and most recently served as Director of U.S. Operations for Wipro Limited."

For an analyst ratings summary and ratings history on Stonegate Mortgage click here. For more ratings news on Stonegate Mortgage click here.

Shares of Stonegate Mortgage closed at $7.21 yesterday.

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