Rocket Companies stock drops toward record low after BofA analyst turns bearish


Shares of Rocket Companies Inc. RKT, -7.85% sank 7.3% toward a record low in midday trading Tuesday, after BofA Securities turned bearish on the mortgage financing company, citing concerns over the impact of a rising rate environment. Analyst Mihir Bhatia downgraded the stock to underperform from neutral and slashed the price target to $11 from $21. Bhatia said that while the company’s “best-in-class” technology platform and strong retail franchise offers better margin protection than its peers, near-term results are likely to be hurt by the “hostile” market backdrop. Bhatia said refinancing of mortgages comprised 85% of origination volume during the first nine months of 2021, “and are likely headed meaningfully lower as higher rates dampen volumes.” The yield on the 10-year Treasury note TMUBMUSD10Y, 1.923%, which influences mortgage rates and refinancings, was at 1.941% in midday trading, up from 1.529% at the end of September. “Competition and mix-shift (towards partner) could impact margins in 2022 and we expect [Rocket] to continue to invest in marketing, technology and non-mortgage businesses, which could lead to higher-than-expected [operating expenditure] spending. The stock has tumbled 24.5% over the past three months while the S&P 500 SPX, -1.65% has lost 8.1%.

This article was originally published by Read the original article here.

Previous articleThe Fed: Economic impact from war between Russia and Ukraine seen as limited for U.S.
Next articleCoronavirus Update: Global trial of reduced-sized booster doses launched


Please enter your comment!
Please enter your name here