Barclays upgrades Rocket, First American to 'overweight' following pullback

Barclays upgrades mortgage company Rocket Companies RKT.N and title insurer First American Financial FAF.N to "overweight" from "equal weight" following recent valuation reset

RKT climbs 3.7% premarket, while FAF is up 1.2%

Brokerage says RKT has a more balanced business mix following the acquisition of home loan service provider Mr Cooper Group, which should help it deliver more stable results through the interest rate cycle

Adds that the overall earnings outlook is more stable than the recent share price pullback suggests

Similar to RKT, Barclays sees FAF's valuation as overly discounted and a compelling early entry point for investors who have remained on the sidelines

"Commercial activity has been a bright spot for the title industry and we expect that to continue" - Barclays analyst Terry Ma

As of last close, RKT down 22.7%, FAF down 5.2% YTD