Oppenheimer lifts Compass stock target to $12 on upbeat outlook

On Friday, Oppenheimer's analyst Jason Helfstein increased the price target for Compass Inc. (NYSE:COMP) shares from $9.50 to $12.00, while maintaining an Outperform rating. Currently trading at $7.78, the stock has shown remarkable momentum with a 68% gain over the past six months. The adjustment comes in anticipation of the company's fourth-quarter results, driven by positive management commentary and a favorable fourth-quarter pre-announcement. This pre-announcement indicated that revenue and EBITDA figures were 8% and $12 million above expectations, respectively. According to InvestingPro data, Compass has demonstrated solid revenue growth of 9.18% over the last twelve months, with analysts expecting profitability this year.

Compass Inc.'s performance was bolstered by November's housing market strength, which led to higher revenue. As a prominent player in the Real Estate Management & Development industry, the company has positioned itself well for market recovery. Helfstein predicts that the existing homes market could grow by 5-10% year-over-year in 2025, buoyed by an increase in supply and the release of pent-up demand. Furthermore, Compass could gain if mortgage spreads revert to historical averages. The analyst underlined that the company's recent beat demonstrates the potential for significant upside when macroeconomic conditions are even slightly better than projected. For deeper insights into Compass's market position and growth potential, InvestingPro offers comprehensive analysis with 15+ additional ProTips and detailed financial metrics.

In his commentary, Helfstein also highlighted Compass's positive stance on the potential end of the "Clear Cooperation" policy. The Supreme Court's decision to reject the National Association of Realtors' (NAR) request to block the Department of Justice's investigation could mean a change in the policy, which would allow for exclusives and private listings across the country. Sellers would have the opportunity to "test the market" privately, which could increase the value of listings for Compass agents.

At the time of the report, Compass shares were trading at approximately 11 times the forecasted FY26 EBITDA, compared to the 14 times EBITDA at which its peers are trading. This valuation suggests a more attractive price point for Compass in comparison to its market counterparts. The raised price target reflects the analyst's confidence in Compass's ability to capitalize on market opportunities and current real estate trends.

In other recent news, Compass Inc. has been the subject of several analyst upgrades and positive financial forecasts. UBS analyst Chris Kuntarich upgraded Compass Inc. from Neutral to Buy, raising the price target to $11.00 based on the company's recent acquisition and potential for organic growth. UBS projects a 14% three-year revenue compound annual growth rate and a 60% adjusted EBITDA CAGR through the fiscal year 2027.

Simultaneously, Needham analysts maintained a Buy rating and a $10.00 price target for Compass Inc., following the company's performance update, which surpassed its revenue and adjusted EBITDA guidance midpoint by 8% and 230%, respectively. Needham analysts anticipate that real estate agents will increasingly gravitate towards tech-enabled brokerages, which could support Compass's growth.

Furthermore, Compass Inc. updated its financial outlook for the fourth quarter of 2024 and the full year, signaling stronger performance than previously anticipated. The company projects record Adjusted EBITDA and free cash flow for 2024, with Q4 revenue between $1.36 billion and $1.39 billion.

In addition, Oppenheimer raised its price target on Compass Inc. shares to $9.50, maintaining its Outperform rating. The adjustment follows Compass's strategic acquisition of Christie's International Real Estate, Midwest and Atlanta brokerages, and a Title company, in a deal valued at $444 million.

These are recent developments, indicating that Compass Inc. is on a positive growth trajectory, according to multiple analyst firms. However, investors are advised to monitor Compass's disclosure channels for material information.

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