On Monday, Evercore ISI made an adjustment to the price target of CBRE Group (NYSE:CBRE), bringing it down to $141.00 from the previous $147.00, while still maintaining an Outperform rating on the stock. The revision comes as the firm anticipates a slower recovery in investment sales revenue for CBRE, factoring in the recent increase in long-term interest rates.
The analyst from Evercore ISI noted that the volatility of bond yields, which may continue throughout the year, could hinder transaction volumes. This is due to the potential for less accommodative policies from the Federal Reserve than initially expected when they began their easing cycle in September. The firm has adjusted its fourth-quarter core EPS estimate for CBRE to $2.16, a decrease from $2.18, placing it slightly below the consensus by 2.8% or 6 cents. Additionally, the full-year 2025 estimate was reduced by just over 2%, moving from $6.10 to $5.97, which is 1.5% or 9 cents below the street's expectations.
In the past 60 days, there has been a noticeable increase in the 10-year Treasury yield, rising from 4.43% to 4.77%. This rise in yields has coincided with a 7.5% decrease in CBRE's stock price, which has underperformed the S&P 500 by 500 basis points. This underperformance has tempered investor expectations ahead of the company's fourth-quarter earnings report, scheduled for February 13.
The adjustment in the price target to $141 is based on the new estimates and revised Discounted Cash Flow (DCF) inputs, which include an updated risk-free rate. This change reflects the firm's response to the evolving economic landscape and its impact on CBRE's projected financial performance.
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