LoanDepot downgraded on higher interest rates at William Blair

William Blair analyst Robert Napoli downgraded LoanDepot to Market Perform from Outperform and no price target. The company reported mixed results as origination volumes came in better than expectations but revenues and earnings were below expectations as gain-on-sale margins have been slower to recover than anticipated, the analyst tells investors in a research note. The firm says interest rates have moved higher than expected, are likely to stay higher for longer, and industry overcapacity is reducing slower than it expected. Blair says LoanDepot’s profitability would likely improve substantially in the event the Federal Reserve reduces interest rates, which is possible in 2024.