CoStar stock price target cut to $85 by Citizens JMP

On Wednesday, Citizens JMP analyst Nicholas Jones adjusted the price target for CoStar Group (NASDAQ: NASDAQ:CSGP), reducing it to $85 from the previous $90, while retaining a Market Outperform rating on the shares. The revision follows the company’s release of its first-quarter and full-year 2025 guidance, which did not meet expectations, leading to a 4-5% decline in CoStar’s stock in aftermarket trading. According to InvestingPro data, 11 analysts have recently revised their earnings expectations downward, with the stock currently trading at a P/E ratio of 174x.

CoStar Group, known for its CoStar Suite and Apartments.com platforms, continues to demonstrate strength in its core operations, with revenue growing at 11.45% over the last twelve months to $2.74 billion. However, the analyst noted that investors are likely to seek evidence that CoStar’s sales hiring initiatives will translate into more robust and sustainable revenue growth in these segments.

The company’s strategy to enhance its sales force is a focal point for monitoring, as it is expected to contribute to an uptrend in net new booking trends. The firm’s commitment to this strategy underpins the belief that it will support revenue increases in CoStar’s principal businesses.

Despite the challenges faced, Citizens JMP maintains its positive outlook on CoStar Group’s revenue growth prospects. The analyst emphasized that while the Residential segment is currently exerting a negative impact on the company’s share price, the overall hiring and expansion efforts should lead to improved financial performance in the long run.

In other recent news, CoStar Group reported its fourth-quarter earnings, falling short of expectations with adjusted earnings per share of $0.15, as opposed to analyst estimates of $0.22. Despite this, the company’s revenue of $709 million slightly exceeded the consensus forecast of $698.89 million, marking an 11% increase year-over-year. For the full year 2024, the company saw an increase in revenue to $2.74 billion, but a decline in net income from $375 million to $139 million.

CoStar Group also provided its outlook for 2025, predicting full-year revenue between $2.985 billion and $3.015 billion, which falls below the analyst projections of $3.084 billion. Despite the disappointing earnings, CEO Andy Florance highlighted the company’s growth, particularly in its Apartments.com and CoStar offerings, which generated $1.07 billion and $1.02 billion respectively.

In other developments, Florance emphasized the company’s progress in the residential real estate market, with Homes.com Network becoming the second largest residential real estate marketplace in the United States within a year. Additionally, the company’s Board of Directors approved a $500 million stock repurchase program. These are some of the recent developments at CoStar Group.

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