UWM Holdings stock rating upgraded at Keefe Bruyette & Woods

On Monday, Keefe, Bruyette & Woods (KBW) analyst Bose George changed the rating for UWM Holdings Corp. (NYSE:UWMC), moving it up from Market Perform to Outperform. This upgrade comes with a revised price target of $7.50, increased from the previous target of $6.50. The adjustment reflects a potential 19% upside to the current share price, with an additional 26% return when factoring in the company’s annual dividend of $0.40 per share.

George’s decision to upgrade UWM Holdings was influenced by the stock’s 5% decline since the company reported its fourth-quarter earnings on February 26, which he believes was an overreaction. The new price target is based on a discounted 11x 2027 estimated price-to-earnings (P/E) multiple, up from the 10x multiple used before. InvestingPro analysis reveals 12+ additional exclusive insights about UWMC’s valuation and growth prospects, available to subscribers.

UWM Holdings is expected to greatly benefit from a mortgage market that is returning to normal. George notes the company’s strong position in the purchase market and its growing share in the refinancing market. He also points out that UWM Holdings’ stock appears more attractive when compared to its peer, Rocket Companies (RKT), due to a significant difference in valuation year-to-date (8.3x versus 11.7x 2027 KBW estimated P/E, respectively).

The analyst’s comments highlight UWM Holdings’ potential to capitalize on market conditions and the company’s competitive standing. With the revised price target and the upgrade to Outperform, investors may see UWM Holdings as a promising opportunity in the mortgage sector.

In other recent news, UWM Holdings Corp. reported its financial results for the fourth quarter of 2024, revealing a significant earnings miss. The company posted an earnings per share (EPS) of -$0.2695, falling short of the forecasted $0.0766. Revenue for the quarter was $560.21 million, below the expected $645.47 million. Despite the disappointing quarter, UWM Holdings achieved a 29% year-over-year increase in full-year production, reaching $139.4 billion. The company also maintained its position as the largest mortgage company in the U.S. for the fourth consecutive year. Looking ahead, UWM Holdings provided volume guidance of $28-35 billion for the first quarter of 2025 and a gain on sale margin guidance of 90-115 basis points. The company is prepared for potential interest rate drops and market shifts, indicating optimistic EPS and revenue forecasts for 2025. CEO Matt Ishbia emphasized UWM’s strategic investments in technology and operational capabilities to prepare for future growth.

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