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On Wednesday, JMP Securities analyst Nicholas Jones adjusted the price target for Opendoor Technologies (NASDAQ:OPEN) stock, lowering it to $1.75 from the previous $2.50. Currently trading at $0.92, InvestingPro analysis suggests the stock is undervalued. Despite this reduction, the firm continues to hold a Market Outperform rating on the company’s shares.
Opendoor’s stock experienced a decline of approximately 6% after the company released its fourth-quarter results for 2024, with revenue reaching $5.15 billion. The drop was largely attributed to a weaker-than-anticipated forecast for the first quarter of 2025 and the overall outlook for the year. The shares have seen a significant reduction of about 29% intraquarter, reflecting broader market sentiment - InvestingPro data shows the stock has declined nearly 43% year-to-date. This trend reflects both macroeconomic challenges and industry uncertainties.
The analyst noted that in the near term, Opendoor might see a slowdown in market share growth, especially if the volume of existing home transactions continues to be challenged. With a significant debt burden of $2.3 billion and rapid cash burn rate, as highlighted by InvestingPro analysis, this could negatively affect the pace at which Opendoor acquires homes and the number of homes it manages to sell. InvestingPro subscribers have access to 20 additional key insights about Opendoor’s financial health and market position.
Despite the current headwinds, JMP Securities recognizes Opendoor’s proactive measures to enhance its cost structure. These efforts are expected to position the company for a rebound to more sustainable growth once the industry conditions stabilize. This potential for improvement is seen as a possible advantage for the company’s stock in the future.
The new price target of $1.75 is derived from an enterprise value to estimated 2026 gross profit multiple of approximately 1.5 times, a decrease from the previous multiple of around 2.4 times. JMP Securities reaffirms their Market Outperform rating for Opendoor Technologies, indicating their belief in the company’s prospects despite the recent challenges.
In other recent news, Opendoor Technologies reported its fourth-quarter 2024 earnings, surpassing analyst expectations with an earnings per share (EPS) of -$0.16, slightly better than the forecasted -$0.17. The company also exceeded revenue projections, posting $1.08 billion against a forecast of $965.32 million, demonstrating a 25% year-over-year increase to $1.1 billion. However, the company’s full-year 2024 revenue declined to $5.2 billion from $6.9 billion in 2023, reflecting ongoing challenges in the real estate market. Despite the earnings beat, UBS analyst Chris Kuntarich maintained a Neutral rating on Opendoor, adjusting the price target to $1.20 from $2.00 due to concerns about unsold inventory and increased delistings. UBS forecasts stable year-over-year revenue growth for 2025, slightly above street expectations, but projects a loss of $102 million in adjusted EBITDA for the fiscal year. The firm also anticipates the first quarter of 2025 to mark the peak of adjusted operating expenses for Opendoor, reaching about $90 million. Opendoor plans to focus on cost efficiency and profitability, with a forecasted revenue between $1.0 billion and $1.075 billion for the first quarter of 2025.
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