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Investing.com - Keefe, Bruyette & Woods (KBW) has reiterated its Market Perform rating and $15.00 price target on Rocket Cos Inc. (NYSE:RKT) following regulatory approval of its acquisition of COOP.
The Government-Sponsored Enterprises (GSEs) have approved Rocket’s acquisition of COOP while implementing a 20% market share limit for GSE servicing, according to KBW’s research note.
The combined Rocket and COOP entity currently holds approximately 13% market share of owned GSE servicing, providing room for growth in this segment while potentially requiring reductions in subservicing activities.
KBW estimates that when including subservicing, the combined company’s GSE market share could already be at or above the newly established 20% threshold, necessitating potential adjustments to the business mix.
The research firm expects "no discernible earnings impact" from these regulatory conditions relative to its current estimates, citing the "more modest profitability of subservicing" compared to owned servicing operations. The company maintains strong liquidity with a current ratio of 28.58. Discover more insights and 10+ additional ProTips with a comprehensive analysis available through InvestingPro’s detailed research report.
In other recent news, Rocket Companies has been in the spotlight with several noteworthy developments. BTIG initiated coverage on Rocket Companies with a Buy rating, setting a price target of $25.00, citing the company’s strong digital leadership in mortgage lending. Meanwhile, Morgan Stanley resumed its coverage with an Equalweight rating and a $16.00 price target, noting the less compelling risk-reward profile after a significant rally in the company’s shares. Additionally, Redfin reported a 1.7% year-over-year increase in the median asking rent in the U.S., reaching $1,790 in July, marking the largest annual gain since early 2023. This increase follows two years of stagnant or declining rental prices. In related housing news, Freddie Mac announced that the 30-year fixed-rate mortgage averaged 6.58%, the lowest level since October. These developments come amid broader market movements, including a recent rally in homebuilder stocks after Federal Reserve Chair Jerome Powell hinted at a potential interest rate cut.
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