On Wednesday, Needham raised its price target on CoStar Group (NASDAQ: NASDAQ:CSGP) shares to $107 from $90, while maintaining a Buy rating. The revision follows CoStar's first-quarter results for 2024, which surpassed expectations in terms of revenue and earnings.
The company's aggressive marketing campaign for Homes.com, initiated in February, was credited for the significant increase in residential revenue, which saw a 41% year-over-year growth.
CoStar Group reported a record in total net new bookings, reaching $86 million, a 7.5% increase from the previous year. This performance is attributed to the successful uptake of Homes.com after the recent marketing efforts. Despite a mixed outlook for the second quarter due to the timing of residential investments, the full-year 2024 guidance was revised upwards in light of the robust start to the year.
The firm also took note of CoStar's recent strategic move, the acquisition of an unnamed company for approximately $1.6 billion in cash and stock. This acquisition is seen as a strategic enhancement, expanding CoStar's reach in both residential and commercial segments. Needham views this deal as a positive step that could further solidify CoStar's market position.
Needham reiterated its Buy rating for CoStar Group, raising the target price to reflect the strong momentum observed in Homes.com, the overall broad-based strength of the company, and the potential for CoStar's performance to exceed current market estimates. The raised target and maintained Buy rating suggest confidence in the company's growth trajectory and strategic initiatives.
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