Jefferies maintains Hold rating on Rocket Companies, raises PT to $14.

Jefferies maintains Hold rating on Rocket Companies, raises PT to $14.

Jefferies has increased its price target for Rocket Companies (RKT) to $14, up from the previous $11.50, while maintaining a Hold rating on the shares [1]. The financial firm anticipates that Rocket's acquisition of Mr. Cooper, following its deal with Redfin, will result in a 37% increase in average earnings per share (EPS) over the years 2026-27. Despite concerns that market consensus might be overly optimistic for the second quarter, Jefferies suggests that investors should start focusing on the anticipated financial performance for fiscal year 2027.

Based on the one-year price targets offered by 10 analysts, the average target price for Rocket Companies Inc (RKT) is $14.25 with a high estimate of $17.00 and a low estimate of $11.50. The average target implies a downside of 5.25% from the current price of $15.04 [1]. The average brokerage recommendation from 11 firms is currently 2.9, indicating a Hold status [1].

GuruFocus estimates the GF Value for Rocket Companies Inc (RKT) in one year to be $7.56, suggesting a downside of 49.73% from the current price of $15.04 [1]. The GF Value is GuruFocus' estimate of the fair value that the stock should be traded at, calculated based on historical multiples, past business growth, and future estimates of performance.

Rocket Companies Inc (RKT) reported $1.3 billion in adjusted revenue, reaching the high end of their guidance range. The company experienced a 17% year-over-year increase in net rate lock volume, driven by growth in refinance and home equity loan offerings. The company also announced strategic acquisitions of Redfin and Mr. Cooper, aiming to create an integrated homeownership platform. Additionally, Rocket Companies Inc (RKT) implemented AI tools to automate tasks, resulting in significant cost savings and increased productivity. The company launched innovative programs like RentRewards and One Zero Rate Break to enhance affordability for home buyers [1].

However, the housing market experienced volatility in April, with mortgage rates climbing back to nearly 7%, impacting consumer sentiment and purchase applications. Rocket Companies Inc (RKT) faced a challenging April with both margin and volume pressures due to market volatility. The company anticipates lower margins in Q2 compared to Q1, influenced by the April dip in performance. Despite strong Q1 results, the company acknowledges that the home buying season has been slow to start, affecting overall momentum. Rocket Companies Inc (RKT) is navigating integration challenges with the acquisitions of Redfin and Mr. Cooper, which require significant focus and resources [1].

References:
[1] https://www.gurufocus.com/news/2991603/jefferies-boosts-rocket-companies-rkt-price-target-amid-acquisition-hopes-rkt-stock-news