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On Monday, Citizens JMP analysts adjusted their rating on Mr. Cooper Group Inc. (NASDAQ: COOP) shares, downgrading them from Market Outperform to Market Perform. The revision followed the recent announcement that Mr. Cooper Group Inc., whose stock has surged 11.12% in the past week to $119.60, has entered into an agreement to be acquired by Rocket Companies, the parent entity of the prominent mortgage originator Rocket Mortgage. According to InvestingPro, the company has demonstrated remarkable performance with a 55.85% return over the past year.
The downgrade comes after the company shared news of the acquisition on Sunday, March 31. Analysts at Citizens JMP believe that Mr. Cooper shares have reached a valuation that is in line with the broader market, citing a comparison with its mortgage operating company (MOC) peers.
According to the analysts, Mr. Cooper’s stock is now trading at 8.9 times the estimated operating earnings per share (EPS) for the year 2025. This valuation is close to the median of 9.6 times operating EPS observed across its peer group within the mortgage sector. With a current market capitalization of $7.61 billion and a P/E ratio of 11.64, InvestingPro data shows the company maintains strong financial health with a current ratio of 4.5, indicating robust liquidity.
The assessment by Citizens JMP suggests that the potential for further price appreciation in Mr. Cooper’s shares may be limited following the acquisition announcement. The analysts’ commentary indicates a view that the stock price now adequately reflects the company’s value in light of the recent developments.
Mr. Cooper Group Inc.’s agreement to be acquired by Rocket Companies marks a significant moment for the company, potentially reshaping its future in the mortgage industry. However, with the acquisition news now priced into the market, the analysts have set expectations for Mr. Cooper’s stock performance accordingly. For deeper insights into COOP’s valuation and 12 additional exclusive ProTips, access the comprehensive Pro Research Report available on InvestingPro, which provides expert analysis on over 1,400 US stocks.
In other recent news, Rocket Companies has announced a significant all-stock acquisition of Mr. Cooper Group, valued at $9.4 billion. This transaction will create a combined servicing portfolio of over $2.1 trillion, covering nearly 10 million clients, and is expected to close in the fourth quarter of 2025. Moody’s has placed Mr. Cooper’s ratings under review for a potential upgrade, anticipating synergies that will enhance the combined credit profile post-acquisition. Similarly, Fitch Ratings has put Rocket Mortgage’s ratings under negative watch, while Mr. Cooper’s ratings are under positive watch, reflecting the expected changes in corporate leverage and business profile after the merger.
The acquisition aims to leverage Mr. Cooper’s servicing platform to enhance Rocket’s mortgage recapture capabilities. Rocket Companies’ leadership predicts the transaction will be immediately accretive to its adjusted earnings per share upon closing, with anticipated revenue and cost synergies. The deal includes a fixed exchange ratio of 11.0 Rocket shares for each share of Mr. Cooper common stock. This acquisition follows Rocket’s previous announcement to purchase Redfin (NASDAQ:RDFN), highlighting ongoing consolidation in the real estate and mortgage sectors. Both companies’ boards have unanimously approved the transaction, which is subject to Mr. Cooper shareholder approval and regulatory clearances.
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