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On Wednesday, Citizens JMP reaffirmed its Market Outperform rating on CoStar Group (NASDAQ:CSGP), a $33.92 billion market cap company, with a steady price target of $85.00. According to InvestingPro analysis, the stock appears to be trading above its Fair Value, despite maintaining strong fundamentals with more cash than debt on its balance sheet. CoStar Group announced first-quarter results for 2025, delivering revenue that aligned with consensus estimates, excluding contributions from Matterport (NASDAQ:MTTR), and an adjusted EBITDA that exceeded expectations. The company, which maintains an impressive 79.59% gross profit margin and has achieved 11.45% revenue growth over the last twelve months, provided full-year guidance that includes Matterport’s projected 4%-5% revenue growth contribution and an anticipated negative impact of approximately $30 million on adjusted EBITDA, matching management’s prior projections.
CoStar Group’s core businesses, CoStar Suite and Apartments.com, continue to show robust performance. However, the company’s ability to boost sales and achieve sustainable revenue growth in these areas is a focal point for investors. Analysts are keenly observing CoStar’s efforts to hire and train new sales staff, aiming to improve net new booking trends moving forward.
Despite the positive aspects of the report, the company’s shares remained relatively unchanged in aftermarket trading. The company’s Residential segment has been noted as a significant drag on the stock, overshadowing the strength in its core businesses. Analysts at Citizens JMP hold that CoStar’s recruitment and sales force expansion efforts are pivotal for driving revenue growth in its primary segments.
The maintained price target of $85 is based on an enterprise value to estimated 2026 commercial EBITDA multiple of approximately 25 times. CoStar’s strategic hiring initiatives are expected to underpin the growth of its main businesses, balancing the negative impact of its Residential segment on the overall stock performance. InvestingPro data reveals the stock trades at a P/E ratio of 242.82, reflecting high growth expectations. For deeper insights into CoStar’s valuation and 12+ additional ProTips, consider accessing the comprehensive Pro Research Report available on InvestingPro.
In other recent news, CoStar Group reported its first-quarter 2025 earnings with a significant miss on earnings per share (EPS) expectations, posting a loss of $0.04 against the forecasted $0.12. Despite the EPS miss, CoStar experienced a 12% year-over-year increase in revenue, reaching $732 million, and adjusted EBITDA surged by 429% from the previous year. The company continues to project revenue growth for 2025, estimating between $3.115 billion and $3.155 billion, and anticipates adjusted EBITDA to range from $355 million to $385 million. Additionally, CoStar’s ongoing strategic initiatives include the integration of Matterport, which was recently acquired, and further development of Homes.com. The company’s CEO, Andy Florence, expressed optimism about future market conditions, expecting a return to double-digit growth as market conditions improve. CoStar’s recent offer to acquire Domain Holdings, a major Australian real estate portal, reflects its expansion strategy, though the acquisition is still under due diligence. Meanwhile, CoStar’s commercial information and marketplace businesses achieved a 43% profit margin in the first quarter, highlighting strong operational efficiency.
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