Key Stats for CoStar Group Stock
- Pre-Market Price change for CoStar Group stock: -4%
- $CSGP Share Price as of Feb. 24: $49
- 52-Week High: $97
- $CSGP Stock Price Target: $76
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What Happened?
CoStar Group (CSGP) stock fell 4% on Tuesday after the commercial real estate data and residential listings company issued first-quarter earnings guidance that disappointed investors.
- While CoStar reported strong fourth-quarter results and reaffirmed its full-year 2026 outlook, the company’s Q1 adjusted earnings forecast of $0.16 to $0.19 per share came in well below analyst expectations.
- The company posted $900 million in Q4 revenue, up 27% year-over-year, and delivered adjusted EBITDA of $177 million, a 58% increase from the prior year.
- For the full year 2025, CoStar generated $3.2 billion in revenue, marking its 59th consecutive quarter of double-digit revenue growth.
- However, the weak Q1 earnings guidance overshadowed these achievements.
CoStar stock faced additional pressure from the company’s continued heavy investment in Homes.com, its residential real estate portal that’s competing directly with established players like Zillow and Realtor.com.
While CEO Andy Florance highlighted that Homes.com has become the second-largest residential portal network in the U.S. with 108 million average monthly unique visitors, the platform is still in growth mode and weighing on near-term profitability.
The company also announced plans to repurchase $700 million in shares during 2026 under its previously authorized buyback program, following the completion of a $500 million repurchase in Q4 2025.
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What the Market Is Telling Us About CoStar Stock
The decline in CoStar Group stock suggests investors are concerned about the company’s earnings trajectory despite strong revenue growth.
The Q1 2026 adjusted EBITDA guidance of $95 million to $115 million reflects significantly lower margins than the company expects to achieve for the full year, largely due to the timing of marketing spend for Homes.com and seasonal revenue patterns from its Domain acquisition in Australia.
Management emphasized that adjusted EBITDA margins are expected to improve throughout 2026, reaching approximately 20% at the midpoint of full-year guidance.
This would represent a substantial improvement from recent quarters, but investors appear skeptical about the timing and magnitude of this margin expansion.
On the positive side, CoStar Group stock could benefit from several growth drivers. The company’s newly launched Homes AI represents what CEO Florance called “the most sophisticated vertical AI application in real estate,” and management plans to deploy this technology across its entire portfolio.
Homes.com has also reached meaningful scale with over 31,000 agent subscribers generating nearly $100 million in annual run-rate revenue, with 76% of agents on annual contracts providing revenue visibility.
The company’s core commercial real estate information business remains healthy, and CoStar reaffirmed its full-year revenue guidance of $3.78 billion to $3.82 billion, representing approximately 17% growth.
However, with adjusted EPS guidance of just $1.22 to $1.33 for the full year, CoStar Group stock is being valued more on its long-term potential than near-term profitability.
Investors should monitor whether Homes.com can continue gaining market share while reducing cash burn from its aggressive marketing campaigns.
If CoStar can successfully transition its residential business from investment mode to profit mode while maintaining strong commercial segment performance, the stock could rebound. But until margins show clear improvement, volatility is likely to continue.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
