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On Thursday, Goldman Sachs reiterated a Buy rating with an $85.00 price target on CoStar Group (NASDAQ:CSGP), a $33 billion market cap real estate technology company currently trading at $80.37. According to InvestingPro analysis, the stock appears overvalued at current levels, though analyst targets range from $63 to $103. Analyst George Tong noted a decline in online traffic at CoStar’s residential platform, Homes.com, which could have negative effects on the company’s residential revenue growth. Homes.com saw a significant 35% year-over-year drop in monthly unique visitors for February 2025, a steep decline from a 1% decrease in January 2025 and a contrast to the 9% growth witnessed in December 2024.
In comparison, Zillow (NASDAQ:ZG) maintained a steady number of monthly unique visitors year-over-year in February 2025, after experiencing a 7% increase in January 2025 and a 5% growth in December 2024. The analyst predicts that CoStar Group’s residential revenue will grow at a 3-year compound annual growth rate (CAGR) of 23% through 2027, which is notably slower than previously forecasted last year.
Additionally, Apartments.com, another CoStar Group property, experienced a 17% year-over-year decline in unique visitors on average over the three months ending in February 2025. This performance is in stark contrast to Zillow Rentals, which enjoyed a 16% average growth in monthly unique visitors during the same period. The competition from Zillow Rentals is believed to be a contributing factor to the deceleration in revenue growth at Apartments.com, which is now expected to be in the low-to-mid teens compared to around 20% before the COVID pandemic.
Despite the challenges in the residential and multifamily online traffic segments, Goldman Sachs anticipates an acceleration in CoStar Group’s organic revenue growth from high single digits to low double digits. This aligns with InvestingPro data showing current revenue growth of 11.45% and a strong financial position with a current ratio of 8.96. InvestingPro has identified 13 additional key insights about CoStar Group’s financial health and growth prospects, available in their comprehensive Pro Research Report. Furthermore, the firm expects an expansion in EBITDA margin from low teens to mid-twenties over the next four to six quarters. These factors are projected to lead to strong double-digit earnings per share (EPS) growth and provide valuation upside for CoStar Group. With the next earnings report due on April 29, 2025, InvestingPro subscribers can access detailed valuation metrics, including the company’s high P/E ratio of 236x and extensive peer comparison tools to make informed investment decisions.
In other recent news, CoStar Group has finalized its acquisition of Matterport (NASDAQ:MTTR), Inc., aiming to enhance AI-driven digital twin technology in the real estate sector. This merger combines CoStar’s property data platforms with Matterport’s 3D capture technology, potentially transforming how properties are marketed and experienced. Meanwhile, Nine Entertainment Co. Holdings Ltd. is in talks with CoStar regarding a potential acquisition of Domain Holdings Australia Ltd. CoStar’s interest in Domain reflects a broader trend of consolidation in the real estate and property technology sectors.
Analysts at JMP Securities have maintained a Market Outperform rating for CoStar Group, setting a price target of $85. They highlighted CoStar’s substantial revenue of $2.74 billion in 2024 and noted the company’s strategic efforts to expand its sales team. These initiatives are expected to drive future growth, despite challenges in CoStar’s Residential segment. JMP Securities also reaffirmed their positive outlook on Zillow, maintaining a $92 price target, citing Zillow’s strong market presence and strategic initiatives in the rental market.
These developments reflect CoStar Group’s ongoing strategic moves and market positioning, which continue to be closely monitored by analysts and investors.
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