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On Wednesday, Needham analysts increased the price target for CoStar Group (NASDAQ: NASDAQ:CSGP) shares, adjusting the figure upward to $98 from the previous $87, while reaffirming a Buy rating on the stock. The adjustment follows CoStar’s first-quarter earnings, which surpassed analysts’ expectations on both revenue and earnings per share, bolstered by the recent acquisition of Matterport (NASDAQ:MTTR) in February and effective cost management strategies. The company, currently valued at $33.92 billion, has maintained impressive revenue growth of 11.45% over the last twelve months, with a robust gross profit margin of 79.59%. According to InvestingPro data, CoStar holds more cash than debt on its balance sheet, demonstrating strong financial health.
CoStar Group’s first-quarter performance was notably strengthened by its successful integration of MTTR, contributing positively to the company’s financials. In addition to the immediate impact of the acquisition, CoStar has also provided guidance for the second quarter, reflecting the new addition to its portfolio. Although the guidance was described as mixed due to the current challenging commercial real estate (CRE) market conditions, the company’s forecast for fiscal year 2025 has been updated to include the MTTR deal while maintaining the organic growth outlook. InvestingPro analysis reveals that net income is expected to grow this year, though investors should note that the stock currently trades at relatively high earnings and EBITDA multiples. For deeper insights into CoStar’s valuation and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
The updated fiscal year 2025 projections anticipate an increase in growth and margins as the year progresses. Despite near-term financial results being affected by the less favorable market conditions, the analysts at Needham expressed a long-term bullish stance on CoStar Group’s shares. Their optimism is rooted in the company’s strategy of expanding its portfolio through mergers and acquisitions, like the recent MTTR deal and the potential acquisition of Domain.
Needham’s analysts highlighted CoStar’s commitment to driving organic growth and enhancing profit margins as key factors contributing to their positive outlook. The raised price target to $98 is a reflection of their confidence in the company’s long-term potential and strategic initiatives. The endorsement reiterates the Buy rating, signaling the analysts’ belief in the ongoing value proposition of CoStar Group’s stock.
In other recent news, CoStar Group reported its first-quarter 2025 earnings, revealing a 12% year-over-year revenue growth to $732 million, although it missed earnings per share (EPS) expectations with a reported loss of $0.04 against a forecast of $0.12. Despite the EPS miss, the company’s adjusted EBITDA surged by 429% from the previous year. Citizens JMP maintained its Market Outperform rating for CoStar Group, reaffirming a price target of $85.00, citing robust performance in CoStar’s core businesses such as CoStar Suite and Apartments.com. The company’s full-year guidance aligns with previous projections, including a 4%-5% revenue growth contribution from Matterport and an anticipated $30 million negative impact on adjusted EBITDA.
Analysts are closely monitoring CoStar’s strategic hiring initiatives aimed at bolstering its sales force to drive revenue growth, particularly in its core segments. The company’s residential segment, however, continues to be a challenge, overshadowing the strength in its primary businesses. CoStar’s strategic focus includes expanding product offerings and market presence, as evidenced by its ongoing integration of Matterport and the development of Homes.com. Looking forward, CoStar projects 2025 revenue between $3.115 billion and $3.155 billion, indicating a growth of 14% to 15%, with adjusted EBITDA expected to range from $355 million to $385 million.
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