Bank of America Upgrades Rocket Companies on Expected Rate Cuts

Bank of America Securities has upgraded Rocket Companies to Buy from Neutral and raised its price target to $24, citing the company's strong position to benefit from falling mortgage rates and pending acquisitions. Rocket's approximately 10% share of the refinancing market positions it well for growth as mortgage rates have recently fallen to 6.55%, the lowest since early 2023, and are expected to decline further with anticipated Federal Reserve rate cuts. The pending $12 billion acquisition of Mr. Cooper is expected to generate around $500 million in synergies, including $400 million in cost savings and $100 million in revenue increases, with refinancing opportunities highlighted by the fact that 22% of Mr. Cooper's servicing portfolio has mortgage rates above 6%. Additionally, Rocket's recent acquisition of Redfin is on track to deliver about $200 million in synergies. Bank of America also raised its 2026 earnings forecast for Rocket by 11% to $1.02 per share, anticipating a larger mortgage market under lower rate scenarios. However, risks remain if mortgage rates stay elevated, which would constrain refinancing activity and pressure Rocket's growth potential.