Rocket Companies, Inc. (NYSE:RKT) is emerging as a major potential winner from falling mortgage rates, with its strong refinancing share and recent acquisitions setting the stage for growth in both volumes and profitability.
The company’s pending purchase of Mr. Cooper and its newly closed Redfin deal promise hundreds of millions in synergies, while an expected wave of refinancing could accelerate earnings momentum as U.S. rate cuts approach.
Bank of America Securities (BofA) analyst Mihir Bhatia upgraded Rocket Companies to Buy from Neutral and raised its price forecast to $24 from $21, implying 17% upside from current levels.
Also Read: Rocket, Mr. Cooper Stocks Rally After Merger Approval, Rate Cut Hopes Lift Market Mood
The bank said Rocket stands to gain from an increase in both purchase and refinancing volumes as mortgage rates ease. It highlighted Rocket’s ~10% share of the refinancing market and raised its 2026 EPS forecast by 11% to $1.02.
BofA also pointed to potential catalysts from the pending acquisition of Mr. Cooper, which is expected to deliver $500 million in synergies, including $400 million in expense savings and $100 million in revenue gains.
The bank noted 22% of Mr. Cooper’s servicing portfolio has coupon rates above 6%, offering refinancing upside. Synergies from the recently closed Redfin acquisition are also tracking toward $200 million.
The bank said consensus estimates may not fully capture these benefits and sees upside to origination volumes if mortgage market forecasts are revised higher.
Risks include mortgage rates staying elevated, which would limit refinancing activity and weigh on volumes. BofA values Rocket at 24x its 2026 EPS, a premium to peers, citing scale, brand and technology as justification.
In July, Rocket reported second-quarter results beating Street consensus with earnings of four cents generated from $1.34 billion revenue. Further, the company guided for third-quarter revenue to be in a range of $1.60 billion to $1.75 billion, versus a Street estimate of $1.50 billion.
Price Action: RKT shares are trading higher by 2.03% to $20.88 at last check Wednesday.
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