On Wednesday, Scotiabank revised its price target for Colliers International (NASDAQ:CIGI), a global real estate services and investment management company. The firm's analyst has reduced the price target to $135.00 from the previous figure of $140.00. Despite this adjustment, the analyst maintains a Sector Outperform rating on the stock.
The decision to adjust the price target comes as Colliers International is currently trading at 10.2 times its estimated 2025 enterprise value to EBITDA (EV/EBITDA) and 15.2 times its projected 2025 price to earnings (P/E). Historically, since 2016, Colliers has traded at an average of 11.3 times next twelve months EV/EBITDA, and since 2020, the multiple has been higher at 12.3 times.
The investment management (IM) segment of Colliers now represents 35% of the company's total business in terms of EBITDA, a significant increase from less than 20% up until 2020. This change is noteworthy as alternative asset managers, a category that includes Colliers' IM segment, are valued at considerably higher multiples, approximately 17 times EV/EBITDA, compared to traditional brokerage firms like CBRE, which trade at 10.7 times.
Scotiabank's valuation model for Colliers is based on a sum-of-the-parts approach. According to their Exhibit 8, the model assigns a multiple of 14 times to the investment management division and 11 times to other segments, which include commercial mortgage, leasing, and outsourcing & advisory services. This analytical framework underpins the bank's continued positive outlook on Colliers' shares, despite the price target adjustment.
InvestingPro Insights
As investors consider the revised price target for Colliers International by Scotiabank, it's important to delve into the current financial metrics and market sentiment. According to InvestingPro data, Colliers International has a market capitalization of approximately $5.47 billion. The stock is trading at a high P/E ratio of 76.61, which is above the adjusted last twelve months (LTM) figure of 68.73, indicating a premium valuation relative to its earnings. This is further underscored by a PEG ratio of 2.45 for the same period, suggesting that the stock's price may be outpacing earnings growth.
InvestingPro Tips highlight that Colliers International is expected to be profitable this year, with a net income growth projection that appeals to long-term investors. However, the company is also trading at a high Price/Book multiple of 6.56, reflecting a premium on its net asset value. Notably, Colliers is a prominent player in the Real Estate Management & Development industry, which may justify its valuation to some extent. For investors looking for a more comprehensive analysis, there are additional tips available on InvestingPro, including insights on earnings revisions and stock price volatility.
For those interested in deeper investment research, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro, where you can access a total of 11 InvestingPro Tips that further detail Colliers International's market position and financial standing.
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