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A JPMorgan analyst made a series of moves in the firm’s research coverage of Consumer Finance.
Overall, JPMorgan analysts have grown incrementally more cautious given the recent commentary from the Fed. The analyst argues the central bank is likely to require a “higher burden of proof” before easing its tightening approach.
“The risk of “overshooting” with QT has increased. We note that we are calibrating for this increased risk largely through lower multiples rather than materially lowering our earnings outlook. The one exception is in the mortgage origination space, where “higher for longer” offers a clear and present impact on volumes and margins,” the analyst said in a client note.
As far as individual stocks are concerned, the analyst downgraded Discover Financial (NYSE:DFS), Enact (NASDAQ:ACT), and Rocket Companies (NYSE:RKT) to Neutral from Overweight.
Discussing the RKT downgrade call, the analyst said the new rating “reflects the impact of higher expected mortgage rates on home origination volumes.”
