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Rocket Companies (NYSE:RKT) climbed more than 11% by 14:01 ET Wednesday, trading at $13.99, following bullish analyst sentiment around its acquisition of Mr. Cooper (NASDAQ:COOP). The $9.4 billion all-stock deal, announced earlier this week, led both Deutsche Bank and KBW to raise their ratings on the mortgage lender.
Deutsche Bank's Mark DeVries upgraded Rocket to Buy from Hold and increased his price target to $16 from $14. He believes the deal marks a major step toward the company's 2027 market share goals, particularly its aim to reach a 20% refinancing share. DeVries also noted the potential for greater revenue synergy if interest rates decline.
KBW analyst Bose George upgraded Rocket to Market Perform from Underperform. He said the acquisition will help Rocket develop a more balanced business model and give analysts greater confidence in earnings projections. George added that Rocket's servicing portfolio is expected to quadruple to roughly $2.15 trillion in unpaid principal balance, significantly boosting its ability to recapture customers in a lower-rate environment.
The stock's 11.03% surge by early afternoon reflects growing optimism around Rocket's strategic move.
This article first appeared on GuruFocus.