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On Wednesday, Keefe, Bruyette & Woods analyst Ryan Tomasello revised the price target for Offerpad Solutions Inc. (NYSE:OPAD) shares, adjusting it downward to $2.25 from the previous target of $3.15. Despite the decrease, the firm maintained a Market Perform rating on the stock.
The adjustment follows Offerpad’s fourth-quarter earnings report, which revealed both GAAP EPS and Adjusted EBITDA (AEBITDA) falling short of Keefe, Bruyette & Woods and consensus estimates. This underperformance was attributed to reduced contribution margins and increased operating expenses, although revenues met expectations. The company’s first-quarter revenue guidance was approximately 40% below Keefe, Bruyette & Woods and consensus, suggesting a greater-than-anticipated EBITDA loss.
Offerpad has communicated its intention to escalate property purchases through 2025, aiming to narrow EBITDA losses and achieve near breakeven by the end of the year. Additionally, management is actively seeking ways to raise capital. However, they assert that reaching breakeven purchase volumes does not hinge on securing this additional funding—a point on which the analysts expressed skepticism.
In light of these developments, Keefe, Bruyette & Woods has revised its 2025/2026 AEBITDA projections for Offerpad to -$23.8 million and +$6.8 million, respectively. These figures represent a significant shift from the previously forecasted +$1.5 million and +$21.5 million. The new price target of $2.25 incorporates these updated estimates.
The report concluded with a note of caution regarding the uncertainty surrounding Offerpad’s access to capital and the potential costs and structure of such capital. Despite maintaining the Market Perform rating, the tone suggests a conservative stance due to these uncertainties. InvestingPro analysis reveals a weak overall financial health score of 1.72, with the company’s current ratio at 1.17 and a concerning Altman Z-Score of 0.99, indicating potential financial distress. Discover the complete financial health analysis and detailed metrics in the Pro Research Report.
In other recent news, Offerpad Solutions Inc. reported its fourth-quarter 2024 earnings, with revenue reaching $174 million, aligning with the upper half of its guidance range. Despite this, the company faced a net loss of $17.3 million for the quarter, though this marked a 12% year-over-year improvement. The full-year revenue for 2024 was $919 million, a 30% decrease from the previous year. Offerpad’s guidance for the first quarter of 2025 indicated weaker than anticipated performance, projecting revenue between $150 million and $170 million, with home sales of 450 to 500 units. JMP analysts remain optimistic about Offerpad, highlighting the company’s cost reduction efforts, which resulted in savings of $44 million in 2024, and maintaining a Market Outperform rating. The company is also expanding its asset-light services, with the Agent Partnership Program now accounting for nearly a third of property acquisitions. Offerpad aims for adjusted EBITDA breakeven by the end of the year, focusing on increasing acquisition activity and maintaining cost discipline.
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