While there are some positive indicators coming out for financial technology stock Rocket Companies (NYSE:RKT), there are also some troubling signs in play. For one analyst, the troubles outweighed the positives, whose remarks sent Rocket shares into a tailspin in Wednesday afternoon’s trading.
The remarks in question came from KBW analyst Bose George, who cut Rocket from Market Perform to Underperform, noting that the impressive gains it enjoyed in 2023 weren’t likely to be repeated in 2024. That wasn’t the only problem KBW spotted, as it pointed out that Rocket is having serious troubles in the mortgage lending sector as well, particularly in the purchase market. KBW is looking for the purchase market to stay weak into much of 2024 but acknowledges that any improvement in the purchase market is likely to mean good news for Rocket.
A Cloudy Outlook Ahead
That, in a nutshell, is the big problem for Rocket right now. Things aren’t looking good, but if there’s any turnaround, it will go well for Rocket. The problem there is that no one knows if there will be improvement or not. Indeed, there are clear headwinds ahead for the market, starting with consumer issues of rising credit card debt, concerns about employment, and rampant inflation along with still-high interest rates. Yet, there are clear signs that rate cuts are set to follow, and that will mean some consumers getting back into the housing market.
Is Rocket Stock a Good Buy?
Turning to Wall Street, analysts have a Moderate Sell consensus rating on RKT stock based on seven Holds and four Sells assigned in the past three months, as indicated by the graphic below. After a 78.49% rally in its share price over the past year, the average RKT price target of $9.11 per share implies 31.58% downside risk.
