Analyst Jeffrey Adelson of Morgan Stanley maintained a Hold rating on Rocket Companies, with a price target of $16.00.
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Jeffrey Adelson has given his Hold rating due to a combination of factors surrounding Rocket Companies’ recent strategic moves and current market valuation. The acquisition of Mr. Cooper is seen as a strong strategic fit, enhancing Rocket’s mortgage origination and servicing capabilities. This deal positions Rocket to leverage its digital platform and high client retention rates to capitalize on Mr. Cooper’s extensive servicing book, potentially reducing customer acquisition costs and improving operational efficiencies.
However, despite these strategic advantages, the stock’s recent 50% price increase has led to a valuation that already reflects much of the anticipated upside. Trading at 17 times the projected 2027 earnings per share, Rocket’s stock commands a significant premium compared to its peers. This elevated valuation, coupled with the operational risks of integrating two acquisitions and the challenging mortgage market environment, suggests that a more attractive entry point may emerge in the future. Thus, Adelson recommends a Hold rating, indicating a wait-and-see approach for potential investors.
In another report released on August 7, TR | OpenAI – 4o also reiterated a Hold rating on the stock with a $19.00 price target.