UWMC - UWM Holdings stock drives up 7% after BTIG upgrades to Buy

2023-10-05 14:21:39 ET

UWM Holdings ( NYSE: UWMC ) stock jumped 7.3% in Thursday afternoon trading after BTIG upgraded the stock to Buy on "inexpensive optionality for mortgage rates to stabilize, with plenty of room for capital raising."

While mortgage rates can still climb higher than its current 20-year high, "we think the stock valuation reflects very low potential for earnings upside if rates stabilize or fall," analyst Eric Hagen wrote in a note to clients.

He also points to the potential for value creation across the capital structure from tapping a broader investor base, including its $2B of unsecured debt. Only about 6% of UWM Holdings ( UWMC ) $7.5B of market cap is held by public shareholders.

"If incremental capital raising is timed and calibrated appropriately, we think it could feed the growth outlook, particularly within the wholesale channel, along with other accretive benefits bestowed on stockholders over time," he said.

And even if rates continue to rise, Hagen thinks the stock can perform well, as it has already shown that it can preserve scale as rates have more than doubled in the last 18 months.

Hagen's Buy rating contrasts with the SA Quant rating , the average SA Analyst rating , and the average Wall Street rating , all at Hold.

More on UWM Holdings

• UWM Holdings: Hold On
• UWM Holdings Corporation (UWMC) Q2 2023 Earnings Call Transcript
• UWM Holdings: Impressive Loan Volumes But Looming Challenges
• Long-term mortgage rates reach highest level in a generation

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