Rocket Companies Inc (RKT)

[eastunder]

Rocket Companies stock climbs after Wells Fargo upgrades to Overweight

Jul. 06, 2022 8:22 AM ETRocket Companies, Inc. (RKT)By: Max Gottlich, SA

https://seekingalpha.com/news/3854535-rocket-companies-stock-climbs-after-wells-fargo-upgrades-to-overweight

Rocket Companies (NYSE:RKT) shares are rising 4.5% in Wednesday premarket trading after Wells Fargo analyst Donald Fandetti upgraded the fintech to Overweight from Equal Weight.

Fandetti pointed out that Rocket (RKT), which is known for its tech-driven mortgage lending business Rocket Mortgage, stands to benefit from the "dislocation" in the residential mortgage market, he wrote in a note to clients.

"We now see a better risk/reward for the stock in a sector where negative sentiment may have peaked," Fandetti said. "And as capacity comes out of the origination market, we should see margins further stabilize and at some point increase modestly," he added.

Furthermore, Rocket (RKT) could be poised to gain market share over time given its scale, while "many mortgage companies continue to struggle and lose market share, as well as be forced to sell attractive mortgage servicing right," the note said. Fandetti is expecting Rocket's market share to fall to 6.6% in 2022 from 8.8% in 2021 and then ticking up to 6.7% in 2023.

In turn, the analyst is lifting his 2023 EPS estimate to $0.75 vs. $0.65 in the prior view. By comparison, a group of 15 analysts see next year's EPS at $0.74, a Y/Y jump of 108.54%.

In the beginning of June, SA's Quant Rating viewed Rocket Companies stock at high risk of performing badly due to declining growth and decelerating momentum.