Re/Max Holdings (RMAX – Research Report), the Real Estate sector company, was revisited by a Wall Street analyst on February 21. Analyst Ronald Kamdem from Morgan Stanley maintained a Sell rating on the stock and has a $7.50 price target.
Ronald Kamdem has given his Sell rating due to a combination of factors impacting Re/Max Holdings. The company’s decision to suspend its quarterly dividend in 4Q23 highlights concerns about its financial health, as this move was linked to litigation settlements and challenges in the housing and mortgage markets. Furthermore, despite a slight increase in cash reserves, the company’s debt level remains high, and there were no share repurchases, indicating cautious financial management.
Another factor influencing the Sell rating is the ongoing litigation issues, including a $55 million settlement that is pending final resolution due to an appeal. Additionally, although there is a resolution in sight for Canadian antitrust litigations, these legal challenges continue to weigh on the company. Operationally, the decline in agent numbers in the US and Canada, along with a decrease in Motto franchises, suggests challenges in maintaining growth momentum, which further supports the Sell recommendation.
RMAX’s price has also changed moderately for the past six months – from $11.360 to $9.110, which is a -19.81% drop .