Story
Rocket Companies Stock Rises After Morgan Stanley Upgrade Cites 'Attractive' Valuation
Summary
Shares of the mortgage lender gained after Morgan Stanley upgraded the stock to Overweight, highlighting a compelling valuation following a steep selloff this year.
Shares of Rocket Companies (RKT) rose in pre-market trading Tuesday after Morgan Stanley upgraded the stock to Overweight from Equalweight, citing an “unusually attractive” valuation following a prolonged decline in its share price.
The Analyst Upgrade
Morgan Stanley lifted its price target on Rocket Companies to $19 from a previous $18. The bank’s analysts noted that the stock had fallen approximately 25% year-to-date and nearly 40% from its 2026 peak as of the July 14 close.
This selloff has brought the company's valuation down to approximately 13.5 times earnings. According to the report, this is well below its historical average of around 17.5 times earnings since early 2023, presenting a more favorable entry point for investors.
Market Context and Outlook
The upgrade comes despite a challenging environment for the mortgage industry, which is contending with elevated interest rates and housing affordability constraints that have weighed on loan origination volumes. Rocket's stock gained 3.7% in pre-open trading even as the broader S&P 500 and NASDAQ indices were pointing lower, indicating the move was driven by company-specific news.
AdMorgan Stanley's thesis is partly based on a longer-term view, with its 2028 earnings per share (EPS) estimate sitting nearly 10% above the Wall Street consensus. The firm suggested that while near-term earnings estimates for 2026 and 2027 may still need to decline to reflect the higher-rate environment, the market has already over-discounted these headwinds.
Divided Analyst Sentiment
The bullish call from Morgan Stanley contrasts with other recent analyst actions, highlighting a divided view on the stock's prospects. Just days earlier, JPMorgan maintained its Hold rating on Rocket Companies and trimmed its price target to $15.50 from $16.
Investors will be watching for further catalysts when Rocket Companies reports its next quarterly earnings, which is scheduled for July 30, 2026. The stock has traded in a 52-week range of $12.17 to $24.36.
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