The rally in Flagstar Financial Inc's (NYSE:FLG) stock due to a smaller-than-expected core loss of 23 cents per share, versus consensus of 29 cents per share, seems overdone, according to JPMorgan.

The Flagstar Financial analyst, Anthony Elian, maintained a Neutral rating and price target of $13 on Monday.

The Flagstar Financial Thesis: The company indicated that it plans to hire 15 more bankers in the first quarter and another 70-80 during the rest of 2025, while setting a goal of generating more than $1 billion of C&I (commercial and industrial) loan outstandings per quarter, Elian said in a note.

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He added, however, that the focus was on the "unfavorable migration in multifamily NPAs," which took Flagstar Financial's total NPA (non-performing asset) balances higher by about 25% sequentially, the analyst stated.

Just one quarter ago, Flagstar Financial said it expects NPAs to decrease 30% by yearend 2025, Elian said. He expressed skepticism around the credit quality of the company's multifamily portfolio, "with us paying most attention to the ~$19B of rent regulated loans in New York."

FLG Price Action: Shares of Flagstar Financial was down 1% to $11.61 at the time of publication on Monday.

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