CTAs keep buying Treasuries, gold longs face stop-loss risk: BofA
On Monday, Morgan Stanley (NYSE:MS)’s analysts have upgraded UWM Holdings Corp. (NYSE:UWMC) stock rating from Equalweight to Overweight, setting a new price target of $6.50, a rise from the previous $6.00. Currently trading at $5.53 and offering a substantial 7.23% dividend yield, the stock sits near its 52-week low of $5.26. The upgrade reflects the firm’s anticipation of an increase in refinancing volumes as interest rates potentially decline. According to InvestingPro analysis, UWMC shows signs of being slightly undervalued based on its Fair Value metrics.
The analysts highlighted historical trends, noting that when the 10-year Treasury yield fell below 4% and the 30-year fixed-rate mortgage reached 6% in August and September of 2024, refinancing volumes in the United States more than doubled in the second half of the year, reaching approximately $260 billion. With the 10-year yield currently at or just below 4%, and possibly decreasing further, Morgan Stanley expects another surge in refinancing activity. InvestingPro data reveals that UWMC has demonstrated strong revenue growth of 13.54% over the last twelve months, with additional growth expected this year. (Subscribers can access 10+ more exclusive ProTips about UWMC’s financial health and market position.)
Morgan Stanley has consequently raised its forecasts for U.S. mortgage market origination volumes for 2025 and 2026 by 3% and 4%, respectively, to $2.03 trillion and $2.33 trillion. Refinancing volumes are also expected to increase by 12% and 13% to $611 billion and $770 billion in the same years. With a market capitalization of $874 million and a beta of 1.69, UWMC shows higher volatility than the broader market, potentially offering opportunities for investors seeking exposure to the mortgage sector. Detailed analysis of these metrics and more is available in UWMC’s comprehensive Pro Research Report on InvestingPro.
UWM Holdings, primarily focused on purchase-oriented business and the mortgage broker market, is strategically positioning itself to capture a significant portion of the refinancing market. The company saw a substantial increase in its share of refinancing in 2024, climbing to 10.7%, a notable rise from 6.5% in 2023. Morgan Stanley believes UWM’s market share in refinancing can continue to grow against the backdrop of rising refinancing volumes.
In response to these developments, Morgan Stanley has adjusted its 2026 estimated earnings per share (EPS) for UWM Holdings upward by 12% to 58 cents, or 51 cents when excluding mortgage servicing rights (MSR) marks due to valuation inputs. This adjustment reflects a positive outlook for the company’s financial performance in light of the anticipated mortgage market dynamics.
In other recent news, UWM Holdings Corporation reported a significant earnings miss for the fourth quarter of 2024, with an earnings per share (EPS) of -$0.2695, falling short of the expected $0.0766. The company’s revenue also came in below forecasts at $560.21 million, compared to the anticipated $645.47 million. Despite these setbacks, UWM Holdings saw a 29% year-over-year increase in full-year production, totaling $139.4 billion, maintaining its status as the largest mortgage company in the U.S. In a separate development, Keefe, Bruyette & Woods upgraded UWM Holdings’ stock from Market Perform to Outperform, citing the company’s strong position in the mortgage market and potential benefits from a returning normalcy in the industry. Additionally, UWM Holdings announced the appointment of Rami Hasani as the new Executive Vice President and Chief Financial Officer. Hasani’s appointment follows the transition of the previous CFO, Andrew Hubacker, to a senior advisor role. The company emphasized that Hasani brings extensive experience from his previous roles within UWM Holdings and Deloitte & Touche, LLP.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.