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Investing.com - Goldman Sachs has reiterated its Buy rating on CoStar Group (NASDAQ:CSGP) with a price target of $105.00, citing strong growth in the company’s residential business. The target represents a potential 19% upside from the current price of $88.06, though InvestingPro analysis suggests the stock is currently trading above its Fair Value.
The firm notes that CoStar views the residential market as an attractive opportunity due to inefficiencies in the U.S. portal market, where competitors focus on lead generation rather than property marketing. CoStar estimates the residential total addressable market at $3 billion with potential EBITDA of $1.5 billion, which is two to three times larger than its Apartments.com business. With a market capitalization of $37.31 billion and revenue growth of 12.18% over the last twelve months, CoStar continues to demonstrate its market leadership. InvestingPro subscribers can access 12 additional key insights about CoStar’s growth prospects and financial health.
Residential bookings remain robust, with CoStar adding 2,000-2,500 new memberships monthly since April. The company has adjusted its pricing structure to reflect agents’ listing volumes, which has lowered average net prices, though recent 10-15% price increases have not slowed growth. Management plans to implement a tiered pricing model for Homes.com over time. The company maintains a strong financial position with a current ratio of 5.83, indicating excellent liquidity to support its growth initiatives.
CoStar is on track to spend approximately $900 million on its residential business this year, with about 60% allocated to marketing and the remainder to content, sales, and technology. The company has expanded internationally by completing its acquisition of Domain in Australia and continuing investments in OnTheMarket in the UK.
The firm’s commercial business remains resilient despite a weak commercial real estate environment, with CoStar Suite benefiting from growing institutional demand and low cancellations. CoStar is targeting 100-200 basis points of annual EBITDA margin expansion in its commercial business, which currently operates at 43% EBITDA margins, by leveraging generative AI to automate content, improve search, and reduce operational costs.
In other recent news, CoStar Group reported its second-quarter 2025 earnings with a notable 15% year-over-year increase in revenue, amounting to $781 million. The company also achieved record net new bookings of $93 million, representing a 65% sequential rise. CoStar Group has completed its acquisition of Domain Holdings Australia Limited, a prominent property marketplace in Australia. This acquisition merges CoStar’s global scale and technology with Domain’s local expertise and brand portfolio, expanding its reach in the Australian property market. Wolfe Research initiated coverage on CoStar Group with an Outperform rating, setting a price target of $105.00. The firm highlighted potential investment returns from Homes.com and continued strength in Apartments.com as key factors for this positive outlook. Additionally, stable growth in LoopNet and CoStar Suite was noted as supportive of the stock’s prospects. These developments reflect CoStar Group’s strategic efforts to enhance its market presence and financial performance.
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