Investing.com -- Shares of Rocket Cos Inc. (NYSE: RKT) soared 13% following an upgrade by Deutsche Bank from Hold to Buy, with an increased price target of $16.00, up from the previous $14.00. This positive shift in sentiment comes as a rebound from the initial drop after the company announced its acquisition of Mr. Cooper Group.

Deutsche Bank analyst Mark DeVries provided a favorable outlook on the acquisition’s potential to meet Rocket Cos’ ambitious market share targets set for 2027, particularly a 20% refinance share. DeVries anticipates the deal will offer a 38% earnings per share (EPS) accretion by 2027, alongside reducing earnings volatility through the cycle due to the servicing book from Mr. Cooper Group acting as a hedge in slower mortgage origination periods.

The analyst’s comments underscore the strategic benefits of the deal, "We are upgrading RKT to Buy from Hold on the back of their proposed $9.4B acquisition of COOP, which we expect to provide a big step toward the ambitious 2027 market share targets laid out last September (at least the 20% refi share target). We model the deal to provide 38% EPS accretion in 2027, while also reducing RKT’s through-the-cycle earnings volatility as COOP’s servicing book provides RKT with an earnings hedge when mortgage originations slow."

Rocket Cos’ shares had initially slumped following the acquisition announcement on Monday but saw a recovery on Tuesday, now standing approximately 5% higher since the deal was made public. The upgrade and the revised price target from Deutsche Bank have contributed to the renewed investor confidence, reflecting a more optimistic view of the company’s future performance and market position.

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