Rocket Stock Downgraded To 'Underperform'

Shares of mortgage lender Rocket Companies (RKT) plunged nearly 8% on Tuesday after a Bank of America analyst downgraded the stock to "underperform" from "neutral" and slashed the target price from $21 to $11.

Shares of the stock sank 7.3% Tuesday on the New York Stock Exchange to close at $11.53.

While praising Rocket’s technology platform and strong retail franchise, analyst Mihir Bhatia devalued the stock, citing difficult market conditions and saying that refinancing of mortgages compromised 85% of loan origination volume during the first nine months of 2021.

He also based his downgrade of the stock on higher interest rates, which are expected to significantly reduce refinancing of loans this year. The Mortgage Bankers Association predicts that 30-year, fixed-rate mortgages will rise to 4% this year and 4.3% next year.

Rocket Companies is scheduled to announce its fourth-quarter and year-end earnings for 2021 on Thursday after the market closes.

NMP reached out to Bhatia for comment on his analysis.