Rocket’s 3Q Sales Explode 163% On Home Loan Demand; Street Sees 24% Upside

Rocket Co.’s 3Q revenues of $4.74 billion surged 163.3% year-over-year and topped the Street’s estimates of $4.55 billion. Its adjusted earnings of $1.21 per share also came ahead of analysts’ expectations of $1.09 per share. The personal finance and lending company also announced a share repurchase plan of $1 billion. However, its shares were down 2.3% in pre-market trading on Wednesday.

Rocket’s (RKT) 3Q closed loan origination volume of $89 billion jumped 122% year-over-year, which is above the company’s growth expectations of 105% to 112% year-on-year. In 3Q, the company’s net rate lock volume soared 101% to $94.7 billion, in line with the company’s growth expectation range of 98% to 108% year-over-year.

As for 4Q, Rocket expects continued strong consumer demand for home loans. It anticipates closed loan volume in the range of $88 billion to $93 billion, reflecting growth of 73% to 83% year-over-year. Net rate lock volume is projected to be in the range of $80 billion to $87 billion, reflecting an increase of 82% to 98% year-over-year. (See RKT stock analysis on TipRanks)

On Nov. 6, Wolfe Research analyst Matthew Howlett initiated coverage on the stock with a Buy rating and a price target of $24 (11.1% upside potential), citing strong consumer housing demand amid lower interest rates and Fed stimulus program.

Currently, the Street has a cautiously optimistic outlook on the stock. The Moderate Buy analyst consensus is based on 5 Buys vs. 9 Holds. The average price target of $26.89 implies upside potential of about 24.5% to current levels. Shares have declined by about 13.3% year-to-date.

Related News:
Rocket Slides 10% In Pre-Market On Slower 3Q Loan Growth
Rockwell Slips On 4Q Sales Miss; Analyst Stays Bullish
Advance Auto Parts’ 3Q Profit Jumps 34%; Analyst Sticks To Hold

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