UBS maintains buy rating on Compass stock following executive meeting

On Monday, UBS analysts reaffirmed their Buy rating and maintained the price target of $11.00 for Compass Inc. (NYSE: COMP), representing an 87% upside from the current price of $5.89. The decision followed a recent meeting with Compass executives, including CEO Robert Reffkin, CFO Kalani Reelitz, and Head of Investor Relations Soham Bhonsle. According to InvestingPro data, the company has shown strong momentum with a 57.6% return over the past year.

UBS analysts highlighted the company’s strategic focus on enhancing inventory depth and integrating technology with Compass’s network of over 20,000 principal agents. The strategy aims to boost high-margin revenue streams, despite uncertainties in the housing market cycle. With annual revenue of $5.93 billion and a market capitalization of $3.07 billion, Compass has established itself as a prominent player in the Real Estate Management & Development industry.

The analysts acknowledged Compass’s efforts in organic agent growth, increasing ancillary product attachment, and controlling non-GAAP operating expense growth to 3-4% year-over-year. They also noted the company’s acquisition of high-quality brokerages as a positive move.

Additionally, UBS analysts expressed confidence in Compass’s inorganic growth strategy, citing the appointment of Lacey Conway, a 20-year industry veteran and former CEO of Latter & Blum, as Executive Vice President of Mergers and Acquisitions. They expect Compass to continue consolidating the fragmented U.S. brokerage market.

UBS concluded that Compass’s current valuation, at less than 9 times estimated FY26 EBITDA, presents limited downside risk. They are optimistic about the company’s future prospects as the path to potential catalysts becomes clearer. InvestingPro analysis suggests the stock is currently fairly valued, with additional insights available in the comprehensive Pro Research Report, which covers key metrics and growth prospects for this $3 billion real estate technology company.

In other recent news, Compass Inc. reported its first-quarter 2025 earnings, showcasing a mixed financial performance. The company experienced a loss of $0.09 per share, missing the forecasted loss of $0.06. However, Compass exceeded revenue expectations, achieving $1.4 billion compared to the anticipated $1.34 billion. The company’s revenue increased by 28.7% year-over-year, marking robust growth. Compass also reported record Q1 adjusted EBITDA of $15.6 million and free cash flow of $19.5 million. Despite these achievements, the company faced challenges in meeting EPS expectations, which may have contributed to a negative market reaction. Looking ahead, Compass provided Q2 revenue guidance between $2 billion and $2.15 billion, with adjusted EBITDA expected to range from $115 million to $135 million. The company aims to continue outpacing market growth and is targeting long-term EBITDA margins of 25-30% in its title and escrow business.

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