JP Morgan initiates CoStar at Overweight on attractive revenue, profitability outlook
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J.P. Morgan on Friday initiated coverage on CoStar (NASDAQ:CSGP) at Overweight as its revenue and profitability outlook is "attractive".
The research firm believes the online real estate marketplace provider can deliver 17% three-year top-line and 21% EBITDA CAGRs on account of revenue diversification and scalability of digital solutions translating into potential margin expansion.
"Significant penetration upside in both single and multi-family real estate markets position CSGP for a multi-billion dollar revenue opportunity," said analyst Alexei Gogolev.
He called CoStar's (CSGP) platform "unmatched" as it contains more than 35 years of propriety data and noted that over $2B was directed to software R&D investments, creating a significant barrier to entry.
"Attractive top-line/profitability outlook, high visibility/guidance accuracy, and strategy of widening the audience of potential users of its real estate information services through online marketplace platforms should drive further re-rating in the stock," Gogolev added.
J.P. Morgan set a price target of $100 on the stock, implying potential upside of 28.4% to its last close.
Wall Street analysts on average are bullish on CoStar (CSGP), but SA Quant rates the stock Hold.