JPMorgan analyst Richard Shane downgraded Rocket Companies to Underweight from Neutral with a price target of $10.50, up from $8.50. Entering 2024 the analyst believes investors should adopt a “more defensive positioning” in the consumer finance sector. This is a reversal from the firm’s bullish outlook in 2023 that was predicated on the belief that the market was fully discounting “the most anticipated/predicted economic slowdown in generations.” With multiples having rebounded towards historic norms, JPMorgan believes the risk/reward outlook for the space is less compelling. The firm says Rocket’s stock already fully discounts potentially higher volumes in 2024 and 2025. It expects an earnings recovery as lower rates drive higher refi volumes , but believes the current valuation multiples already reflect “best case” share and margin scenarios.
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