Analysts at Morgan Stanley have downgraded UWM Holdings, the parent of United Wholesale Mortgage, citing valuation risk, given the 55% increase in its stock price since the end of July through today.
But at various points between those two milestones, the gain in UWM on a percentage basis was even higher.
On July 31, UWM's stock price had a low for the day of $3.98 per share, closing at $4.02.
The company
How UWM has been trading since the end of July
By Aug. 12, it was up to a closing price of $5.06, jumping the following day to $5.59. By Sept. 5 UWM broke through the $6 ceiling, closing at $6.31.
The stock did reach $7.09 per share as an intraday high on Sept. 17, the first day of
On Sept. 18, when UWM became the first major lender this year to announce
Morgan Stanley analyst Jeffrey Adelson cut his rating on UWM to "equal-weight" from "overweight" noting that publicly traded originators are now priced for lower mortgage rates.
Adelson also specifically mentions
What is the reason for the UWM downgrade?
"Our view for mortgage originations in 2026 already incorporates a low 6% mortgage rate, which can certainly drive a mini boom in refi originations (we forecast refi up approximately 30% to 50% in 2025/26)," Adelson wrote. "Despite this improved outlook, we downgrade UWMC to equal-weight as we think most of this is now in the price."
Rocket is trading 16 times Morgan Stanley's 2027 earnings per share outlook, while UWM is at 9 times because of improved expectations on volume.Rocket recently completed its purchase of Redfin and is
"We need confidence that mortgage rates can sustain a move below 6% for the next leg of the trade to work," Adelson said. But if and when that will happen is the question.
Fannie Mae's September forecast expects the 30-year FRM to average 6% in the third quarter of 2026 before
However, the Mortgage Bankers Association's September outlook maintains its view that across all four quarters of 2026, the 30-year will average 6.4%. Its full year 2027 outlook has it falling to 6.2%; the organization has not yet provided quarterly predictions for that year.
But Adelson pointed out that
In a section of the note specifically on UWM, Adelson added that "with a large move in mortgage rates behind us, we prefer to step back to the sidelines and play names less reliant on lower long-term rates and benefiting from lower deposit costs (Ally) or from idiosyncratic market share stories (Capital One, SLM)."
The 30-year conforming mortgage averaged 6.327% on Sept. 26, versus 6.195% for Sept. 17, according to data from product and pricing engine Optimal Blue.
Adelson's price target for UWM is $6.50 per share, while for Rocket, it is $18. Rocket closed on Sept. 26 at $19.51 per share.
Why BTIG maintains its buy rating on UWM
BTIG, on Sept. 22, issued its own report on UWM, maintaining its "Buy" rating on the stock.
It raised its adjusted earnings per share estimate for the quarter which is coming to an end by 1 cent to 15 cents per share, citing an increase in origination volume.
"We think there could be room for another 15-20% upside to our earnings estimate if mortgage rates find momentum to fall to 6%," wrote BTIG analyst Eric Hagen.
The Fed cut could lead to further reductions in interest rate volatility, which boosts the odds for lower and more stable mortgage rates heading into 2026, he said.
It now expects the company to produce $41 billion for the period; on the second quarter earnings call, UWM management gave a range between $33 billion and $40 billion.
"We think some originators including UWM have used the Fed cut as a marketing tactic to grab the attention of borrowers with higher note rates, which includes continuing to offer teaser rates/concessions in the form of temporary interest rate buydowns," Hagen said.
National Mortgage News reached out to UWM for comment about the Morgan Stanley report.
