UBS raises Compass Inc stock price target to $12

On Wednesday, UBS analyst Chris Kuntarich revised the price target for Compass Inc. (NYSE:COMP) stock upwards to $12.00 from the previous $11.00, maintaining a Buy rating on the shares. The stock, currently trading at $8.95, has shown remarkable momentum with a 113% return over the past year. The adjustment reflects a slightly increased EBITDA multiple from 14x to 15x. According to InvestingPro analysis, the stock appears overvalued at current levels, though analyst targets range from $5.50 to $13.00. Kuntarich’s analysis is based on Compass’s stronger than anticipated first-quarter guidance, the likelihood of an 8% rise in attach rates for FY25, and a non-GAAP operating expense forecast for FY25 that is approximately 9% above UBS estimates.

According to Kuntarich, the upward revision in the price target and the positive outlook for Compass stock are influenced by the company’s performance and strategic acquisitions. The company has demonstrated strong revenue growth of 15.2% in the last twelve months, though InvestingPro data shows it operates with relatively weak gross profit margins of 11.7%. The acquisition of Christie’s has been particularly impactful, leading to an upgrade to a Buy rating in a previous note. UBS anticipates that Compass’s EBITDA could potentially triple from FY24 to FY26, driven by low single-digit organic operating expense growth, robust free cash flow generation, and a strategy focused on more effective listings.

The analyst expects Compass to continue its growth trajectory, supported by the company’s ability to execute its marketing strategy effectively. The three-phase marketing strategy, which is showing early positive signs, is set to be further detailed in a virtual presentation by Compass CEO Robert Reffkin and President of Growth Rory Golod on February 28, 2025. The event will also feature a live demonstration of Compass One, an initiative by the company.

The UBS analyst’s revised estimates for Compass’s revenue and EBITDA for FY25 have increased by 1.7% and 1%, respectively. This projection takes into account the company’s guidance and the potential for further expansion in its service offerings. Compass’s strategic moves, including the Christie’s acquisition and its marketing initiatives, are expected to contribute significantly to the company’s financial growth and the performance of its stock in the coming years.

Investors interested in learning more about Compass’s strategies and financial outlook are encouraged to contact their UBS sales representative to participate in the upcoming virtual presentation. For a comprehensive analysis of Compass’s financial health, valuation metrics, and growth prospects, InvestingPro subscribers can access the detailed Pro Research Report, which includes over 30 key financial metrics and expert insights. This is one of 1,400+ US stocks covered in-depth on the platform.

In other recent news, Compass Inc. has reported strong fourth-quarter results, exceeding revenue and adjusted EBITDA expectations by 8% and 230%, respectively. This performance has led to several analyst firms revising their outlooks. Needham increased its price target for Compass to $12.00, citing the successful integration of the Christie’s acquisition and a promising marketing strategy. Oppenheimer also raised its target to $12.00, highlighting a favorable pre-announcement and potential market opportunities. UBS upgraded Compass’s rating from Neutral to Buy, with a new price target of $11.00, due to the company’s acquisition and growth potential.

Morgan Stanley (NYSE:MS) adjusted its price target to $8.50, maintaining an Equalweight rating while acknowledging Compass’s effective cost management and strategic initiatives. The company’s recent acquisition of Christie’s is expected to drive further growth, with analysts noting potential synergies and market share gains. Additionally, the potential elimination of the Clear Cooperation policy could provide an advantage to Compass, allowing for more flexibility in listings. These developments suggest a positive outlook for Compass as it navigates current real estate trends.

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