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On Friday, Deutsche Bank (ETR:DBKGn) initiated coverage on CoStar Group shares (NASDAQ:CSGP), assigning a Buy rating and establishing a price target of $89.00. The firm highlighted CoStar Group’s extensive history of compiling real estate information, which spans over three decades. According to Deutsche Bank, the company’s proprietary databases provide a competitive edge, especially within its flagship CoStar suite, which operates on a subscription basis. InvestingPro data shows the stock trading at premium multiples, with a P/E ratio of 218, reflecting market confidence in its business model.
CoStar Group’s strategic expansion into the residential real estate market with the introduction of Homes.com was noted as a bold move. Although the launch initially shifted focus away from its primary operations, resulting in slower growth rates, Deutsche Bank anticipates a recovery phase. The firm expects CoStar Group to concentrate investments back on its core business, which, coupled with a gradual rebound in the commercial real estate market, should lead to stabilized and accelerated growth. Recent financial data shows strong revenue growth of 11.45% over the last twelve months, with an impressive gross profit margin of nearly 80%.
Deutsche Bank also pointed out the company’s potential for long-term growth, both internationally and through further product diversification. With over $3 billion in cash reserves, adjusted for the upcoming acquisition of Matterport (NASDAQ:MTTR), CoStar Group is seen as having significant strategic options to explore. The analyst’s commentary underscored the company’s strong financial position and the growth opportunities that lie ahead as it refines its investment strategy and capitalizes on market recovery trends. InvestingPro analysis reveals 13 additional key insights about CoStar’s financial health and growth prospects, available in the comprehensive Pro Research Report.
In other recent news, CoStar Group has announced a major workforce expansion in Richmond, aiming to accommodate 3,500 employees by 2026. This move aligns with the growth of Homes.com, which now averages 110 million unique visitors monthly. CoStar is also enhancing its workforce by hiring 500 new sales professionals and 100 market analysts to support its operations. Additionally, CoStar has offered to acquire all shares of Domain Holdings Australia at $4.20 per share, conditional on several factors, including board approval and due diligence.
Analysts have recently adjusted their price targets for CoStar Group. Needham lowered its target from $100 to $87, while Citi reduced it from $88 to $86, both maintaining a Buy rating. Citizens JMP also revised its target to $85 from $90, retaining a Market Outperform rating. These adjustments follow CoStar’s earnings report, which exceeded expectations but included cautious guidance for 2025. The company’s strategy to expand its sales force is seen as a key factor in driving future revenue growth.
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