Rocket Companies (RKT) shares were cut to Underweight from Neutral on Thursday, with analysts raising the price target to $10.50 from $8.50 per share.
Analysts, in the note covering consumer finance stocks, said that in 2024, they believe investors should adopt more defensive positioning in the Consumer Finance sector.
"With multiples having rebounded towards historic norms, we believe the NTM risk/reward outlook for the space is less compelling," they wrote.
On RKT, analysts stated that they are lowering the rating as it fully discounts higher volumes in 2024. "While we continue to view RKT as a long-term winner in the mortgage sector, we believe the stock is now fully valued (absolute and relative)," said analysts.
"Following the recent run-up in share price we believe this scenario is fully discounted by investors, and risk/reward is skewed to the downside should volumes disappoint," they added. "We expect an earnings recovery as lower rates drive higher refi volumes, however we believe current valuation multiples already reflect “best case ̇ TAM, share and margin scenarios."