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Mortgage lender Rocket stock pops on Wells Fargo upgrade

Yahoo Finance Live anchors discuss Rocket Companies after Wells Fargo upgraded the stock.

Video transcript

BRIAN SOZZI: Rocket Companies, not to be fused with Rocket Labs, if you're a search around the Yahoo Finance platform, getting an upgrade over by Wells Fargo. Price target is now $10, up from $6.50. Essentially saying that the mortgage market remains extremely challenging. Good to see Wells Fargo acknowledging that.

I'm sure you will see that in Wells Fargo's own results when they report in a few weeks. Nonetheless, they look at Rocket as a beneficiary of this dislocation. And we've talked this company numerous times and they've seen pressure on their margins as mortgage rates have climbed, but still, they are the-- perhaps one of the biggest players inside the mortgage market.

And you have to wonder at some point when is the market going to give them just a little more love than what they have been getting. And the stock is down, I believe, over 50% year-to-date. Now a $16 billion market cap. A lot of negativity is priced in here, at least according to Wells Fargo.

BRAD SMITH: Yeah, I think it's fair to say that Jay Farner is one of the more transparent CEOs looking through the economy, looking through how this is really impacting his company, especially. And at a time where we do have less bids or lower bids on active homebuying processes out there, and then additionally mortgage rates rising, causing less of those home buyers to be able to still go after some of those homes as aggressively as they would have previously when mortgage rates were lower. You know, that particularly is going to be one of those shocks that Rocket Companies does have to endure.

But I think more longer term, even as we were discussing with Aaron a moment ago, and you pointed this out in our Slack channel, it sounds like if there is going to be a Fed rate cut that is potentially at least being talked about in Wall Street among analysts and economists that could take place in early 2023, then maybe that's the time to start thinking about or kind of rethink about and refresh that conversation of the home buying process as well. And we'll see what that means for companies, like a Rocket Company.