Key Takeaways
- CoStar shares jumped 6.2% today after Keefe Bruyette raised its price target to $34 from $29. Zillow rose 8.5%, Lennar 7.2% and Rocket Companies 6.4%.
- The new target is a small push, and today’s jump has already carried CoStar past it.
- Analysts expect CoStar’s normalized EPS to grow from $0.87 in 2025 to $2.34 by 2028 as the company cuts what it spends on Homes.com.
- Third-quarter results after the close on Oct. 27 are the next test of whether Homes.com’s losses keep shrinking.
CoStar Group (CSGP) stock jumped 6.2% today after Keefe Bruyette raised its price target. But three housing names with no upgrade of their own rose even more: Zillow (Z) gained 8.5%, Lennar (LEN) 7.2% and Rocket Companies (RKT) 6.4%. All of this happened on a rough day for the broader market.
The Analyst Is Playing Catch-Up
Before Thursday’s open, Keefe Bruyette analyst Ryan Tomasello raised his CoStar target 17%, to $34 from $29. He kept a Market Perform rating.
The new target was only a few percent above Wednesday’s close, and today’s jump has already carried the stock past it.
The rest of the Street is a bit more generous. Even after today’s move, the average analyst target of $37.65 is still above the stock. A year ago, though, it was $96.50…
CoStar Joined a Broader Housing Rally
This morning Keefe Bruyette also cut its Lennar target to $73 from $75 and kept an Underperform rating. Lennar rose 7.2% anyway, more than CoStar did, so today looks more like a housing trade than a reaction to one analyst.
The housing data didn’t give investors much to work with either. Redfin, which Rocket owns, reported that U.S. pending home sales fell 1.9% in a week to a new low, and that “mortgage rates remain in the mid-7% range.”
Investors seem to be betting on a recovery before the data shows one.
TIKR Tracks 21 Analysts on CoStar Group. How many say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on CoStar Group, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See CoStar Group’s Analyst Ratings
The Homes.com Payoff Is in the Estimates
For CoStar, housing matters through Homes.com, its challenger to Zillow. Spending there is a big reason the stock lost more than half its value this year, first on a weak profit guide in February and then on a revenue guidance cut in July.
That spending is now coming down. CoStar planned to cut its net investment in Homes.com by more than $300 million this year, down from $850 million in 2025. In its July 28 report, the company said its residential segment turned adjusted EBITDA positive for the first time in the second quarter.
Analysts expect normalized EPS to climb from $0.87 in 2025 to $1.36 this year and $2.34 by 2028 (only three analysts go out that far)…
And the stock isn’t paying much of a premium for that growth. At Wednesday’s close CoStar traded at 21x forward earnings, a bit higher after today’s jump. Its five-year average is 66x, and the low was 17x in late September…
My Opinion
Keefe Bruyette is catching up to a stock that had already run, while the gains in Zillow, Lennar and Rocket suggest a broader housing rally also contributed to CoStar’s rise. Still, near the bottom of its five-year valuation range, I think CoStar is reasonably priced as long as Homes.com keeps shrinking its losses.
The next test comes when CoStar reports third-quarter results after the close on Oct. 27, the day before management meets investors with Needham.
So what is CoStar Group stock actually worth?
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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 of the stocks mentioned. Thank you for reading, and happy investing!
