Bullish indicating open at $55-$60, IPO prices at $37
Investing.com -- Shares of Rocket Companies (NYSE:RKT) modestly climbed 0.5% following an endorsement from Andrew Left’s Citron Research. Citron, known for its investment analysis, compared Rocket Companies to a "sleeping juggernaut" in the real estate sector, emphasizing the firm’s potential to become the "Amazon (NASDAQ:AMZN) of Housing."
Citron’s bullish stance is rooted in Rocket Companies’ strategic use of artificial intelligence, vertical integration, and data analytics. The research firm highlighted that Rocket’s business model is not solely dependent on mortgage refinancing activities, contrary to popular belief. Citron sees the company’s innovative approach as a significant advantage in an industry that has largely remained traditional, with less than 15% of mortgages originated online despite 85% of home searches beginning on the internet.
According to Citron, Rocket Companies is positioned to outperform even in an environment of rising interest rates, which could potentially reduce competition and consolidate market share among larger players. Citron’s projections for Rocket’s EBITDA are optimistic, suggesting a future value of $2 billion, with additional contributions from Mr. Cooper and Redfin (NASDAQ:RDFN) post-synergy, bringing the total projected EBITDA to $4 billion.
Applying a 15x multiple to this figure, which Citron argues is reasonable for a dominant platform within a $12 trillion total addressable market, the firm estimates an enterprise value of $60 billion for Rocket Companies. With 1.8 billion shares outstanding, this valuation could translate to a per-share price of approximately $33.33.
Citron’s analysis and expectations provide a stark contrast to the current market perception, which may have undervalued Rocket Companies’ growth potential and technological edge in the real estate sector. This positive assessment from a respected research entity appears to have resonated with investors, leading to the slight uptick in the company’s stock price during the trading session.
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