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On Thursday, DA Davidson upgraded eXp World Holdings Inc (NASDAQ:EXPI) stock rating to Buy from Neutral, setting a new price target of $10.75. The upgrade reflects positive indicators in the company’s U.S. agent count, which has seen growth in recent weeks after six consecutive quarters of decline. This turnaround is attributed to eXp World’s successful strategies in attracting high-volume teams, which could potentially counteract the bearish perspective investors have held towards the company. According to InvestingPro data, EXPI, currently trading at $7.67, appears undervalued based on its Fair Value analysis, with a market capitalization of $1.2 billion and annual revenue of $4.58 billion.
The firm’s analysts observed that eXp World’s efforts to increase its U.S. agent count have begun to bear fruit, with a positive net addition of agents observed over the past three weeks. If the second quarter ended today, the company would likely report a quarter-over-quarter agent growth of approximately 0.5%, surpassing the current consensus of an expected 0.8% decline. This growth is seen as a direct result of eXp World’s focus on recruiting high-volume teams in recent months.
Internationally, eXp World’s agent count has remained stable, while its international realty revenues have surged by 103% year-over-year in the first quarter of 2025. The company’s international business benefits from more favorable commission splits and higher caps compared to its U.S. brokerage, resulting in higher gross margins. Analysts expect the international revenue mix to contribute to an improvement in eXp World’s consolidated gross margins over the next few years. InvestingPro analysis reveals current gross profit margins of 7.43%, suggesting significant room for improvement. InvestingPro subscribers can access 18 additional key insights about EXPI’s financial health and growth prospects through the comprehensive Pro Research Report.
DA Davidson also points to the industry’s gradual shift towards cloud and virtual brokerages like eXp World, noting that a significant portion of U.S. residential agents still operate under traditional brokerage brands. However, a report from Recruiting Insight highlighted a substantial increase in agents moving to capped revenue share model brokerages, suggesting a potential acceleration in the industry’s migration to platforms like eXp World’s.
Lastly, eXp World’s focus on operational expenditure efficiency, including the use of artificial intelligence, has been highlighted as a key area for potential improvement. The company’s efficiency metrics are already favorable when compared to peers, but there is room for further enhancement, which could become evident in the second half of 2025. This focus on efficiency, coupled with the positive trends in agent count and international monetization, underpins DA Davidson’s upgraded outlook on eXp World Holdings Inc. InvestingPro data shows strong free cash flow yield and analysts expect net income growth this year, supporting the company’s operational efficiency initiatives.
In other recent news, eXp World Holdings reported its Q1 2025 earnings, revealing a revenue of $954.9 million, which fell short of the anticipated $997 million. Despite a 4% increase in real estate sales volume, the company faced a challenging market environment, which impacted its financial performance. The cash position improved by 6% year-over-year, amounting to $115.7 million, providing some financial flexibility. In a separate development, eXp World Holdings received preliminary court approval for a settlement agreement related to a class action lawsuit, though final approval is still pending.
The company continues to expand internationally, with recent launches in Peru and Turkey and plans for further expansion into Japan and Ecuador. eXp World Holdings is also focusing on enhancing operational efficiency through AI-driven initiatives, as emphasized by CEO Glenn Sanford. The company aims to improve unit economics in the latter half of 2025. Additionally, eXp World Holdings’ stock performance was noted by analysts, with Stephens providing insights into the company’s strategic moves and market challenges.
Investors will be closely monitoring the outcome of the pending court settlement and the company’s international expansion efforts. The company’s focus on leveraging AI and its commitment to being agent-centric remains a key part of its strategy moving forward.
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