Rocket sinks after BofA turns bearish, slashes PT to Street-low

Home Point Capital

22/02/2022 17:49

** Rocket Companies  RKT.N  shares sink 7.5% to $11.61 on
Tues after BofA Global Research downgrades to 'underperform'
from 'neutral', citing "challenging rate backdrop" for mortgage
originators
    ** BofA slashes price objective by $10 to $11, lowest on
Wall Street, per Refinitiv
    ** "While we admire RKT's best-in-class technology platform
and its strong retail franchise, which we think offers better
margin protection than peers, near-term results will be impacted
by the hostile market backdrop," BofA writes in note
    ** Though co continues to grow its non-mortgage businesses,
near-term results will be driven its especially large refinance
franchise, BofA says
    ** "Refi mortgages comprised 85% of 9M21 origination volume
and are likely headed meaningfully lower as higher rates dampen
volumes" - BofA
    ** Brokerage expects rev to decline 17% yr/yr in 2022,
adding that investing in marketing, technology and non-mortgage
businesses could lead to higher-than-expected OpEx spending
    ** RKT slated to report Q4 results on Thurs (Feb 24) after
the bell; analysts on avg calling for rev to fall 45% yr/yr to
$2.63 bln and for adj EPS of 37 cents vs $1.14 in yr-ago period,
per Refinitiv IBES data
    ** Avg rating among 16 analysts covering RKT is 'hold' and
median PT is $16
    ** With decline on the session, shares down ~17% YTD and
have lost ~41% in past 12 months

 (Lance Tupper is a Reuters market analyst. The views expressed
are his own)
 ((lance.tupper@thomsonreuters.com
lance.tupper@tr.com 1-332-219-1430))