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On Thursday, UBS downgraded KE Holdings (NYSE:BEKE) stock from Buy to Neutral, while simultaneously increasing the price target to $24.50, up from the previous $22.70. The revision comes as the company’s stock reached UBS’s prior target. According to InvestingPro data, KE Holdings has delivered impressive returns with a 60.9% gain over the past year, though current analysis suggests the stock is slightly overvalued at its market capitalization of $27.1 billion. KE Holdings, which has seen a year-to-date growth of 30% in existing home transactions and achieved robust revenue growth of 20.16% in the last twelve months, may not experience significant earnings revisions for the year 2025, according to UBS analysts. This outlook is partly due to anticipated higher agency costs for the year. InvestingPro analysis shows the company maintains a GOOD financial health score of 2.69, with 15 additional key insights available to subscribers.
The firm also noted that KE Holdings’ continued investment in land acquisitions for its Beihaojia business could restrict the potential for multiple expansions. With the stock currently trading at a P/E ratio of 45.28x and showing high EBITDA and EBIT multiples, which is notably above its average trading multiple over the past two years, UBS suggests that the risk-reward profile for KE Holdings has become less appealing.
UBS has adjusted its financial model to account for KE Holdings’ actual financial performance in 2024 and has slightly reduced its adjusted net profit forecasts for 2025 and 2026 by 2-3%. The new price target of $24.50 reflects these updates and is based on a 20 times price-to-earnings (PE) ratio for 2025, which remains unchanged from UBS’s previous valuation model.
KE Holdings operates in the real estate sector and is known for its platform that facilitates housing transactions and services. The company’s financial health and market position are closely watched by investors, with changes in analyst ratings and price targets often influencing the stock’s market performance. As of now, UBS’s revised rating and price target suggest a more conservative outlook for the company’s stock in the near term. For a comprehensive analysis of KE Holdings’ valuation and growth prospects, investors can access the detailed Pro Research Report, available exclusively on InvestingPro, which covers over 1,400 top US stocks with expert insights and actionable intelligence.
In other recent news, KE Holdings has announced its inclusion in the Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect programs. This development allows investors in Mainland China to trade KE Holdings shares through cross-boundary investment channels, potentially increasing the liquidity of its shares and broadening its investor base. On the financial front, Morgan Stanley (NYSE:MS) has updated its outlook on KE Holdings, raising the stock price target to $27.00 from $19.00 and maintaining an Overweight rating. The revised estimates account for a shortfall in fourth-quarter earnings for 2024 but project significant growth in the following years.
Meanwhile, Jefferies has adjusted its price target for KE Holdings to $26.00 from $30.00, while keeping a Buy rating. Despite a shortfall in non-GAAP earnings due to a one-off accrual, the company exceeded expectations in gross transaction value and revenue. KE Holdings continues to demonstrate robust market share gains, particularly in the new home segment, and is expected to maintain its strategic initiatives, including the One Body Three Wings Strategy. The company’s use of artificial intelligence to enhance agent performance is also noted as a positive indicator for future growth. These developments reflect KE Holdings’ ongoing efforts to expand its market presence and leverage technology for improved performance.
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