On Wednesday, BTIG maintained a positive stance on UWM Holdings Corp. (NYSE:UWMC), reiterating a Buy rating and an $8.00 price target for the company's stock. The firm's analyst adjusted the full-year 2024 earnings per share estimate upward by 6.5%, setting it at $0.48 from the previous $0.45. This revision follows an increase in the gain on sale margin estimate by 7 basis points for the latter half of the year, while keeping other projections constant, such as a total origination volume of $122 billion, origination expenses of $950 million, and a year-end mortgage servicing rights (MSR) portfolio valued at $270 billion.
The decision to adjust the forecast came after a webcast with UWM Holdings' management on Tuesday. During the event, management highlighted the competitive nature of the broker channel, which is expected to continue. However, they also indicated that some margin improvement could be anticipated if mortgage rates stabilize or decrease, particularly if refinancing activities start to occupy a larger portion of the product mix. Currently, refinancing represents only 15% of UWM's mix and margins are below 100 basis points.
BTIG's revised estimate takes into account a potential modest improvement in margins, assuming that the refinancing mix could increase to 20% or more. The firm's analyst suggests that even a slight shift in the product mix towards more refinancing could benefit UWM Holdings' margins.
UWM Holdings Corp., based in Pontiac, Michigan, is a prominent player in the mortgage lending industry, particularly known for its strong presence in the wholesale lending market. The company's performance is closely watched by investors, as it is one of the largest wholesale lenders in the United States.
InvestingPro Insights
As investors consider BTIG's optimistic outlook on UWM Holdings Corp. (NYSE:UWMC), it's worth noting key metrics and insights from InvestingPro that could further inform market perspectives. UWM Holdings Corp.'s market capitalization stands at a robust $680.93 million, reflecting its significant presence in the mortgage lending industry. Despite facing challenges in profitability over the last twelve months, with a negative P/E ratio of -50.99, analysts anticipate a turnaround with net income expected to grow this year. This is underscored by a notable price uptick over the last six months, signaling growing investor confidence as the stock price has returned 56.64% in that period.
InvestingPro Tips reveal that while some analysts have revised their earnings downwards for the upcoming period, the company's liquid assets exceed short-term obligations, providing a cushion for operational flexibility. Additionally, with a high return over the last year of 61.44%, UWM Holdings Corp. has demonstrated its capacity to reward investors amidst volatility. Those interested in a deeper dive into UWM Holdings Corp.'s financials and future outlook can explore additional insights with 8 more InvestingPro Tips available, offering a comprehensive analysis of the company's potential.
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