Rocket Companies: Balanced Risk/Reward as Lower Mortgage Rates Boost Fundamentals but Valuation Caps Upside

Analyst Jeffrey Adelson from Morgan Stanley maintained a Hold rating on Rocket Companies and keeping the price target at $18.00.

Jeffrey Adelson has given his Hold rating due to a combination of factors reflecting both improving fundamentals and valuation constraints. He acknowledges that the administration’s push to buy a large volume of mortgage bonds is likely to reduce mortgage rates, which should meaningfully support refinancing volumes and benefit Rocket Companies’ earnings power. His team’s updated rate outlook, calling for mortgage rates to end 2026 modestly lower than previously expected, expands the pool of borrowers who could economically refinance and brings industry volumes closer to the firm’s bull-case assumptions. At the same time, he notes that not every “in-the-money” borrower will actually refinance, so the uplift to Rocket’s business will be tempered by realistic pull-through rates and execution risks.

Adelson also highlights that industry forecasts, such as Fannie Mae’s projection for strong growth in 2026 originations, already embed some benefit from lower-rate expectations, which may limit incremental upside from here. While a more pronounced and sustained move in mortgage rates toward the mid‑5% range could justify the higher earnings implied in his bull case for Rocket, this scenario is not yet assured. Given that Rocket’s share price already reflects a meaningful portion of the anticipated improvement in mortgage origination volumes, he sees the risk/reward profile as balanced at current levels. As a result, he concludes that maintaining a Hold (Equal-weight) rating is appropriate until there is clearer evidence that the more optimistic rate and volume scenario will fully materialize.

In another report released on January 6, Barclays also maintained a Hold rating on the stock with a $22.00 price target.