RKT Stock Forecast & Price Target

Rocket Companies demonstrated a positive financial trajectory, with an 8% increase in book value quarter-over-quarter, rising to $4.56, and an impressive 17% year-over-year growth in total servicing UPB, now at $593 billion. The company's internal purchase pipeline saw a 10% year-over-year increase, indicating strong momentum in expanding its market share, particularly in the purchase market, alongside existing strength in the refi market. Additionally, the advancements in AI-driven automation have significantly improved operational efficiency, resulting in estimated savings of approximately $40 million and enhanced service capacity, further positioning the company favorably for future growth.

Rocket Companies faces a challenging outlook due to seasonally weak demand in its mortgage origination business, particularly highlighted by a sluggish performance in January 2025, although a modest recovery was seen in February. Operationally, while F4Q24 expenses were lower than forecast, the expectation for flat gross origination service (GOS) margins combined with lowered earnings per share (EPS) estimates for the upcoming years indicates a lack of growth momentum. Additionally, the skewed risk/reward dynamics reflect a significant downside potential, with an estimated 14% dip from base case expectations and a concerning 30% additional downside when factoring in a more pessimistic scenario.