Bullish indicating open at $55-$60, IPO prices at $37
On Tuesday, Barclays (LON:BARC) upgraded Rocket Companies Inc . (NYSE:RKT) stock rating from Underweight to Equalweight and increased its price target to $14, up from the previous $10. The stock, currently trading at $14.66, has shown remarkable momentum with a 16.35% gain in the past week and a 37.58% surge year-to-date, according to InvestingPro data. This adjustment reflects Barclays' revised outlook on the company's future, particularly in light of a potential transformative deal.
Terry Ma, an analyst at Barclays, noted the possible merger of COOP's leading servicing business with Rocket Companies' strength in originations could be a game-changer for the firm. With a current market capitalization of $29.27 billion and impressive revenue growth of 35.21% in the last twelve months, Rocket Companies has demonstrated strong operational performance. The analyst anticipates that this move could lead to a more balanced business model at scale, with an estimated 24% earnings per share (EPS) accretion by 2026.
Despite acknowledging the presence of dis-synergies, such as United Wholesale Mortgage Corporation (UWMC) pulling subservice from COOP, and the inherent integration risks, Barclays believes the long-term benefits of the deal could outweigh the short-term drawbacks.
The analyst's commentary highlighted the strategic nature of the potential combination, suggesting it could significantly enhance Rocket Companies' market position. "We are upgrading RKT shares to EW. We view the potential combination of COOP's market leading servicing business with RKT's strength in originations as transformative," said Ma.
Barclays' upgraded rating and price target suggest a more optimistic view of Rocket Companies' stock, reflecting confidence in the company's ability to navigate the challenges and capitalize on the opportunities presented by the proposed deal. InvestingPro analysis shows the stock is currently fairly valued, with additional insights available in the comprehensive Pro Research Report, which covers key metrics and expert analysis for informed investment decisions.
In other recent news, Rocket Companies Inc. has announced a significant acquisition of Mr. Cooper, valued at $9.4 billion, expected to close in the fourth quarter of 2025. This move is anticipated to enhance Rocket's diversification, market position, and earnings stability. Following this announcement, S&P Global Ratings revised Rocket Mortgage's outlook from stable to positive, citing the potential benefits of this acquisition. Deutsche Bank (ETR:DBKGn) upgraded Rocket Cos from Hold to Buy, raising the price target to $16.00, highlighting the acquisition's potential to meet ambitious market share targets and improve earnings per share by 2027. Keefe, Bruyette & Woods maintained a Market Perform rating with a $14.00 price target, indicating a neutral outlook. Meanwhile, UBS analysts also kept a Neutral rating with a $14.00 price target, acknowledging the strategic rationale behind Rocket's recent acquisitions while noting valuation concerns. These developments reflect Rocket's strategic efforts to strengthen its market presence and expand its service offerings in the housing sector.
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