BTIG analyst Eric Hagen has maintained their neutral stance on COOP stock, giving a Hold rating yesterday.
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Eric Hagen’s rating is based on the strategic implications of Mr. Cooper Group’s acquisition by Rocket Companies. The all-stock deal, which values Mr. Cooper at approximately $143 per share with an additional $2 cash dividend, positions Rocket as a dominant player in the mortgage servicing market with a significant market share. Despite this potential for increased scale and synergies, Hagen maintains a Hold rating due to the complexities and uncertainties associated with the integration process.
Moreover, while the acquisition is expected to generate $500 million in synergies, including revenue and operational efficiencies, there are concerns about the stickiness of mortgage servicing rights and the refinancing of Mr. Cooper’s existing debt. The valuation reflects a cautious approach, considering the potential risks of prepayment in a down-rate environment. Hagen’s analysis suggests that while the deal may enhance operational scale, it also introduces factors that warrant a neutral stance until the integration’s outcomes become clearer.
COOP’s price has also changed moderately for the past six months – from $92.180 to $119.600, which is a 29.75% increase.