Analyst Jason Haas CFA of Wells Fargo reiterated a Sell rating on CoStar Group (CSGP – Research Report), retaining the price target of $65.00.
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Jason Haas CFA has given his Sell rating due to a combination of factors impacting CoStar Group’s financial outlook. Primarily, the losses associated with Homes.com were a significant concern, as Haas noted the company’s ongoing commitment to this venture, including investments in a permanent sales force and brand advertising. Despite some bullish perspectives suggesting potential improvements in a more favorable housing market, Haas expressed skepticism about these prospects, especially considering the established competition in the residential real estate market.
Moreover, Haas pointed out the discrepancy between CoStar’s projected revenue growth and the Street’s expectations, with the company’s year-to-date net new bookings declining. Additionally, while there is anticipation of an acceleration in CoStar’s core business, concerns about declining vacancy rates potentially affecting Apartments.com remain. Haas also highlighted the substantial investment required for Homes.com, which has led to a contraction in EBITDA margins, making current valuation and Street estimates appear overly optimistic.