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Shares in lending giant Rocket Companies bucked this week’s big stock market selloff as mortgage rates came down and investment analysts weighed in on the company’s ambitious acquisition plans.
Investors bid Rocket’s share price up 11 percent in heavy trading Friday — a day when stock market indices tanked for a second day on fears that new U.S. tariffs will spark a trade war and recession.
The U.S. stock market rout is pulling mortgage rates down, as investors shift billions of dollars into less risky bets like government bonds and mortgage-backed securities.
Lower mortgage rates could help lenders do more business. But Rocket also got a boost from upgrades by analysts at Deutsche Bank and Keefe, Bruyette & Woods (KBW) in light of Rocket’s plans to acquire real estate brokerage Redfin and loan servicing giant Mr. Cooper.
Shares in Rocket initially dropped 11 percent, to $11.60, on March 31 after the deal to acquire Mr. Cooper was announced.
But on April 2, Deutsche Bank analyst Mark DeVries upgraded Rocket as a stock to buy — citing upside potential from a lower rate environment and synergies from the Mr. Cooper acquisition in lifting his price target from $14 to $16, Seeking Alpha reported. KBW analyst Bose George raised his rating of Rocket from “underperform” to “market perform.”
At Friday’s closing price of $15.40, shares in Rocket were up 33 percent from Monday’s intraday low, and 18 percent above the March 28 closing price of $13.03.
Mr. Cooper shareholders are slated to receive 11 shares of Rocket for each share in Mr. Cooper in an all-stock deal that valued Mr. Cooper at $9.4 billion at Rocket’s March 28 closing price. Shares in Mr. Cooper gained 1 percent Friday to close at $134.21, up 28 percent from $104.49 on March 28 before the deal was announced.
Shares in loanDepot also gained 16 percent Friday to close at $1.45. In the last 12 months, shares in loanDepot have traded for as much as $3.22 and as little as $1.13 as the company seeks a path to profitability.
Other publicly-traded mortgage lenders including Flagstar Financial and Guild Holdings saw their price per share decline Friday but fared better than the market as a whole.
Shares in the nation’s biggest mortgage lender, Pontiac, Michigan-based United Wholesale Mortgage (UWM), touched a new 12-month low of $5.26 Friday, before bouncing back to close at $5.53, down half a percentage point for the day.
Although UWM generated a $329 million 2024 profit — its best year ever for purchase mortgage originations — shares in UWM are down 43 percent from last year’s high of $9.74 in August.
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