2 Analyst Takes On The First Post-IPO Rocket Companies Earnings Report

Rocket Companies Inc RKT reported solid second-quarter results Wednesday and guided to strong volumes in the third quarter. 

The Rocket Companies Analysts: Timothy Chiodo of BofA Securities maintained a Buy rating on Rocket Companies with a $32 price target.  

Credit Suisse’s Jason Kupferberg maintained a Neutral rating and $29 price target. 

Why BofA's Bullish On Rocket: The Detroit-based mortgage company guided to a gain-on-sale margin between 4.05% and 4.3% for the third quarter, which is disappointing since it represents a decline from the record margin of 5.19% achieved in the second quarter, Chiodo said in a note. 

The third-quarter lock volume guidance range of $93-$98 billion is 7%-13% higher than BofA’s prior estimate of $86 billion.

The analyst said the company’s loan volume guidance of $82-$85 billion also implies market share gains of 175-200 basis points on current industry origination forecasts.

While Rocket Companies projected a decline in volumes in the fourth quarter, this “is based on normal seasonal patterns in the housing market, not weaker demand,” Chiodo said.

See Also: Rocket Companies First Quarterly Earnings Report Shows Closed Loan Volume Up 126% At $72B

Why Credit Suisse Is Sidelined On Rocket: The company enjoys an industry leading position due to its technology platform and high recapture rates, and has prospects for market share gains ahead, Kupferberg said in a note.

“We continue to look for an opportunistic entry point, further signs of purchase market share gains, and/or potential for capital allocation for more optimism on the shares,” the analyst said. 

The midpoint of the GoS margin guidance range missed Credit Suisse’s estimate of 4.27%.

Rocket's lock volume guidance for the third quarter came in higher than Credit Suisse’s estimate of around $81 billion, implying 10-11% market share based on industry origination forecasts.

RKT Price Action: Rocket shares were down 13.48% to $27.09 at last check Thursday.