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On Monday, BofA Securities updated its outlook. co-starring group (NASDAQ:) is a provider of commercial real estate information, analytics and online marketplaces. The company raised Coster's price target from $97.00 to $111.00, but maintained its “buy” rating on the stock.
The adjustment follows an important development last Friday, when CoStar's stock rose 8% versus a 1% rise. The jump was in response to news that the National Association of Realtors (NAR) had agreed to settle a series of antitrust lawsuits. As part of the settlement, NAR will pay $418 million in damages and eliminate the fee provision. This change is expected to reduce commissions for U.S. buyer agents.
Analysts believe the resolution of the lawsuit is a positive development for Coster, particularly for its housing division, Homes.com's earnings. The settlement is also seen as validating Koster's housing strategy, which had been met with some skepticism.
In light of these events, BofA Securities has revised its forecasts and valuation assumptions for CoStar Group. The company has raised the 2025 enterprise value/EBITDA (EV/EBITDA) multiple for Coster's commercial business from 25.5x to 28x. The change reflects a more optimistic outlook following the company's 2024 Information & Business Services Conference, which signaled a possible upside to 2024 guidance.
Additionally, the exit multiple under the discounted cash flow (DCF) model for CoStar's residential business has been increased to 26x from 23x previously. This adjustment is based on increased confidence in the growth trajectory of the housing sector following the NAR settlement.
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