Hold Rating for Redfin Amid Uncertainty from Pending Acquisition and Mixed Financial Signals

Citi analyst Ygal Arounian maintained a Hold rating on Redfin (RDFN – Research Report) yesterday and set a price target of $9.20.

Ygal Arounian’s rating is based on a combination of factors including Redfin’s recent financial performance and strategic developments. The company reported first-quarter revenue and adjusted EBITDA that exceeded expectations, but the lack of guidance for the second quarter due to a pending acquisition introduces uncertainty. This acquisition, expected to close in the second or third quarter, is likely to keep Redfin’s shares trading in line with the fixed ratio agreed upon in the deal’s terms.
Additionally, while Redfin’s lead agents and loyalty sales have shown significant year-over-year growth, the company’s margins in Rentals and Real Estate Services were below expectations. The partnership with Zillow, which includes a guaranteed minimum payment for lead generation services, provides some financial assurance, yet restructuring expenses and additional costs are anticipated. These mixed signals contribute to the Hold rating, reflecting a cautious stance amid both opportunities and risks.