Rocket Companies, Inc. ( RKT ) stock is under pressure following its merger with Mr. Cooper Group Inc. , as investors weigh the potential for cost synergies against a broader slowdown in mortgage origination.

Despite a recent 15% drop since the deal closed, the combined company is poised to become the nation’s largest mortgage originator and servicer, with analysts noting that lower interest rates could drive higher loan volume and stabilize earnings.

On October 1, the Detroit-based homeownership platform announced the completed acquisition of Mr. Cooper. Mr. Cooper holders are building long-term RKT positions, with some using Rocket’s deeper liquidity to monetize COOP gains amid index-related flows.

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BTIG analyst Eric Hagen reiterated a Buy rating on the stock, maintaining a price forecast of $25.

The analyst noted that the current entry point for the stock is attractive, as it has fallen 25% from its high on September 17, the day the Fed cut rates, and has dropped 15% since the merger closed on October 1.

Hagen said most of the Mr. Cooper holders he’s spoken with favor building a long-term position in Rocket Companies ( RKT ), though some are tapping Rocket Companies’ higher liquidity to realize Mr. Cooper’s gains.

The analyst noted that since the March 31 merger announcement, Mr. Cooper has averaged about $150 million in daily volume versus more than four times that in Rocket Companies ( RKT ).

He added that Mr. Cooper’s concurrent removal from the S&P SmallCap 600 likely introduced technical noise, given his estimate that roughly 30% of Mr. Cooper’s float was in passive ETFs.

Lastly, he put pro forma shares at 2.8 billion after the Mr. Cooper and Redfin Corporation deals, 35% Class A and 65% Class L held by senior leadership, with each share now carrying one vote after March’s collapse of the Up-C structure, the analyst writes.

Meanwhile, the late-summer rally across mortgage finance has faded in recent weeks as investors see few near-term catalysts to push mortgage rates decisively below the 6% psychological line, and a potential government shutdown could modestly weigh on new originations.

He still expects two additional Fed cuts by year-end, which he thinks could dampen rate volatility and support lower mortgage rates, but he also warned that equity valuations may be exposed if today’s outlook for roughly 100 bps of easing through 2026 is pared back on renewed inflation worries.

In the analyst’s view, the valuations can still stabilize or improve even with higher mortgage rates. But unlocking meaningful “recapture” gains likely requires stronger borrower incentives to refinance or relocate, boosting churn-driven revenue.

Hagen said his 2026 EPS forecast of 61 cents assumes roughly half of merger synergies next year, underpinned by about $170 billion of originations, $9 billion in total revenue, and $7 billion of operating expense.

Price Action: RKT shares were trading higher by 1.88% to $16.57 at last check Friday.

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