CoStar Group (CSGP) AI Stock Analysis

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CoStar Group

(NASDAQ:CSGP)

Rating:66Neutral

Price Target:

$80.00

▲(7.22%Upside)

CoStar Group's overall stock score is primarily driven by strong earnings call performance and financial stability, despite technical weakness and high valuation concerns. Continued growth and strategic acquisitions bolster confidence, but market challenges and lack of dividend yield remain key risks.

Positive Factors

Board and Governance

The nomination of experienced directors, including a new Chairwoman, is intended to strengthen the board and improve governance.

International Expansion

CoStar has entered a binding agreement to acquire 100% of Domain Holdings, a leading Australian online real estate marketplace owner.

Negative Factors

Investments and Expenses

Concerns exist that investments in Homes.com may be more extensive and prolonged than originally anticipated, impacting the share price.

Market Competition

Investors are concerned about large competitors encroaching on the Multifamily space, potentially impacting Apartments.com's share gains and margins.

CoStar Group (CSGP) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$31.22B

Dividend YieldN/A

Average Volume (3M)3.27M

Price to Earnings (P/E)257.4

Beta (1Y)0.99

Revenue Growth11.27%

EPS Growth-60.22%

CountryUS

Employees6,593

SectorReal Estate

Sector Strength69

IndustryReal Estate - Services

Share Statistics

EPS (TTM)0.14

Shares Outstanding421,886,660

10 Day Avg. Volume2,880,954

30 Day Avg. Volume3,274,252

Financial Highlights & Ratios

PEG Ratio-17.76

Price to Book (P/B)3.58

Price to Sales (P/S)0.00

P/FCF Ratio-925.30

Enterprise Value/Market Cap0.93

Enterprise Value/Revenue2.67

Enterprise Value/Gross Profit12.99

Enterprise Value/Ebitda42.05

Forecast

1Y Price Target

$87.75

Price Target Upside17.61% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering9

CoStar Group Business Overview & Revenue Model

Company DescriptionCoStar Group, Inc. provides information, analytics, and online marketplace services to the commercial real estate, hospitality, residential, and related professionals industries in the United States, Canada, Europe, the Asia Pacific, and Latin America. It offers CoStar Property that provides inventory of office, industrial, retail, multifamily, hospitality, and student housing properties and land; CoStar COMPS, a robust database of comparable commercial real estate sales transactions; CoStar Market Analytics to view and report on aggregated market and submarket trends; and CoStar Tenant, an online business-to-business prospecting and analytical tool that provides tenant information. The company also provides Lease Comps and Analysis, a tool to capture, manage, and maintain lease data; CoStar Lease Analysis; Public Record, a searchable database of commercially-zoned parcels; CoStar Real Estate Manager, a real estate lease administration, portfolio management, and lease accounting compliance software solution; and CoStar Risk Analytics and CoStar Investment. In addition, it offers apartment marketing sites, such as ApartmentFinder.com, ForRent.com, ApartmentHomeLiving.com, WestsideRentals.com, AFTER55.com, CorporateHousing.com, ForRentUniversity.com, Apartamentos.com, and Off Campus Partners; LoopNet Premium Lister; LoopNet Diamond, Platinum, and Gold Ads; LandsofAmerica.com, LandAndFarm.com, and LandWatch.com for rural land for-sale; BizBuySell.com, BizQuest.com, and FindaFranchise.com for operating businesses and franchises for-sale; Ten-X, an online auction platform for commercial real estate; and HomeSnap, an online and mobile software platform, as well as Homes.com, a homes for sale listings site. CoStar Group, Inc. was founded in 1987 and is headquartered in Washington, the District of Columbia.

How the Company Makes MoneyCoStar Group generates revenue primarily through subscription-based services and advertising. Its key revenue streams include subscription fees for access to its commercial real estate databases and analytics services, which are utilized by real estate professionals for market research, property valuation, and decision-making. Additionally, CoStar earns revenue from advertising and listing fees on its online marketplaces, such as Apartments.com and LoopNet, where property owners and managers list their properties for sale or lease. The company also benefits from strategic acquisitions that expand its data offerings and market reach, as well as partnerships with real estate firms and other entities that enhance its service portfolio.

CoStar Group Key Performance Indicators (KPIs)

Any

Net New Bookings

Net New Bookings
Indicates the value of new contracts signed, reflecting sales momentum and future revenue potential. A higher number suggests strong demand for CoStar Group's services and growth in market share.

Chart InsightsCoStar Group's net new bookings have experienced volatility, with a notable decline in 2024. Despite this, the Q4 2024 earnings call highlighted a 21% sequential increase in net new bookings, signaling potential recovery. The company is focusing on expanding its sales force and enhancing its Homes.com platform, which could drive future growth. However, challenges such as economic volatility and modest growth in segments like LoopNet remain. The strategic expansion and a $500 million share buyback program reflect management's confidence in navigating these challenges.

Data provided by:

Main Street Data

CoStar Group Earnings Call Summary

Earnings Call Date:Apr 29, 2025

(Q1-2025)

% Change Since: -9.78%|

Next Earnings Date:Jul 29, 2025

Earnings Call Sentiment Positive

The earnings call reflects a strong performance in revenue and adjusted EBITDA growth despite a challenging commercial real estate market. The company has successfully integrated acquisitions and expanded its brand presence, particularly with Homes.com. However, the commercial real estate environment remains difficult, impacting certain sectors negatively.

Q1-2025 Updates

Positive Updates

Record Q1 Revenue and Growth

CoStar Group reported Q1 2025 revenue of $732 million, marking a 12% increase year-over-year. This achievement marks the 56th consecutive quarter of double-digit revenue growth.

Strong Adjusted EBITDA Increase

Adjusted EBITDA for Q1 was $66 million, a 429% increase compared to Q1 2024, exceeding consensus and at the top end of guidance range.

International Growth and Net New Bookings

International businesses achieved $5 million ARR in Q1 '25, representing 56% year-over-year growth. Company net new bookings were $56 million, up 6% sequentially from Q4 '24.

Apartments.com Expansion

Apartments.com reported Q1 revenue of $282 million, an 11% increase over Q1 '24. The platform added 4,300 new communities in Q1, the most properties added in a single quarter in almost 10 years.

Homes.com Brand Awareness Growth

Homes.com's unaided awareness increased 9x to 36% since February '24. It is now the second most visited U.S. residential portal with 104 million average monthly unique visitors.

Successful Integration and Expansion Initiatives

STR's integration contributed to its best quarter for net new bookings, up 17% year-over-year. Meanwhile, CoStar for lenders achieved its best quarter of net new bookings, up 116% year-over-year.

Negative Updates

Challenging Commercial Real Estate Environment

Operating in one of the worst commercial real estate environments in decades, with high office vacancy rates at 16% and real asking rents at a 30-year low.

Decline in Industrial and Retail Sectors

Record lows for industrial absorption and a 6% year-over-year decline in real asking rents. Retail asking rents are at 10-year lows.

Net Loss Due to Matterport Acquisition Costs

CoStar posted a $15 million net loss in Q1, primarily due to one-time costs from closing the Matterport acquisition.

Matterport's Initial Financial Impact

Matterport contributed an adjusted EBITDA loss of $2.7 million for the first-quarter stub period.

Company Guidance

During CoStar Group's Q1 2025 earnings call, the company provided guidance for both the upcoming quarter and the full fiscal year. CoStar expects revenue for Q2 2025 to range between $770 million and $775 million, representing a 14% year-over-year growth at the midpoint. For the full year, they anticipate revenue of $3.115 billion to $3.155 billion, indicating an annual growth rate of 14% to 15%. The adjusted EBITDA for 2025 is projected to be between $355 million and $385 million, equating to an adjusted EBITDA margin of approximately 12%, though this includes a reduction of approximately $30 million due to the Matterport acquisition. The guidance reflects continued investment in Homes.com, expected to contribute to mid-teens to low 20s percent revenue growth for the residential segment in 2025, with acceleration anticipated in the second half of the year.

CoStar Group Financial Statement Overview

Summary

CoStar Group demonstrates solid revenue growth and a strong balance sheet with low leverage, positioning it well in the real estate services industry. However, challenges in operational profitability and cash flow volatility pose potential risks. Continued focus on enhancing operational efficiency and cash generation could bolster financial performance.

Income Statement

Positive

CoStar Group's TTM revenue grew by 2.77% from the previous year, indicating steady growth in the real estate services industry. Despite this, the company experienced a slight net income decline, impacting the net profit margin, which decreased to 4.17%. The EBIT margin turned negative, signaling operational challenges. However, the EBITDA margin remains positive at 4.21%, suggesting some resilience in operational cash generation.

Balance Sheet

Very Positive

The company's balance sheet is robust with a low debt-to-equity ratio of 0.02, highlighting minimal leverage and financial stability. The equity ratio stands at a healthy 82.02%, reflecting strong asset backing by equity. Return on equity is modest at 1.37%, indicating room for improvement in profitability.

Cash Flow

Positive

CoStar Group's free cash flow turned positive in the TTM, showing a recovery from previous negative figures. However, the free cash flow growth rate is volatile. The operating cash flow to net income ratio is 2.58, suggesting efficient cash conversion, yet the free cash flow to net income ratio is only 0.38, indicating limited free cash generation relative to net income.

TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
2.81B	2.74B	2.46B	2.18B	1.94B	1.66B
	Gross Profit
2.23B	2.18B	1.96B	1.77B	1.59B	1.35B
	EBIT
-500.00K	4.70M	282.30M	450.95M	432.34M	289.20M
	EBITDA
165.70M	151.60M	389.80M	662.83M	571.90M	406.15M
	Net Income Common Stockholders
117.20M	138.70M	374.70M	369.50M	292.60M	227.13M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
4.95B	4.68B	5.22B	4.97B	3.83B	3.76B
	Total Assets
9.03B	9.26B	8.92B	8.40B	7.26B	6.92B
	Total Debt
1.09B	1.15B	1.11B	1.11B	1.12B	1.14B
	Net Debt
-3.86B	-3.53B	-4.11B	-3.86B	-2.71B	-2.61B
	Total Liabilities
1.69B	1.70B	1.58B	1.53B	1.55B	1.54B
	Stockholders Equity
7.34B	7.55B	7.34B	6.87B	5.71B	5.38B
Cash Flow		Free Cash Flow
-34.00M	-245.30M	464.20M	420.05M	404.51M	437.76M
	Operating Cash Flow
302.80M	392.60M	489.50M	478.62M	469.73M	486.11M
	Investing Cash Flow
-1.44B	-912.90M	-238.60M	-69.06M	-381.34M	-464.16M
	Financing Cash Flow
-35.10M	-13.70M	-3.70M	733.98M	-15.68M	2.66B

CoStar Group Technical Analysis

Technical Analysis Sentiment

Negative

Last Price74.61

Price Trends

50DMA

77.77

Negative

100DMA

76.50

Negative

200DMA

76.17

Negative

Market Momentum

MACD

-0.96

Positive

RSI

43.97

Neutral

STOCH

24.65

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CSGP, the sentiment is Negative. The current price of 74.61 is below the 20-day moving average (MA) of 75.91, below the 50-day MA of 77.77, and below the 200-day MA of 76.17, indicating a bearish trend. The MACD of -0.96 indicates Positive momentum. The RSI at 43.97 is Neutral, neither overbought nor oversold. The STOCH value of 24.65 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for CSGP.

CoStar Group Risk Analysis

CoStar Group disclosed 38 risk factors in its most recent earnings report. CoStar Group reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 3 New Risks

Stock repurchases under our stock repurchase program are discretionary, and we cannot guarantee that our stock repurchase program will achieve the desired objectives. Share repurchases diminish our cash reserves and could also increase the volatility of the trading price of our common stock. Q4, 2024

We may be unable to complete the acquisition of Matterport or otherwise realize the benefits of the pending Matterport acquisition, which could have an adverse effect on us. Q4, 2024

Use of new and evolving technologies, including AI, could impact our ability to protect our data and intellectual property from misappropriation by third parties. Q4, 2024

CoStar Group Peers Comparison

Overall Rating

UnderperformOutperform

Sector (60)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
JLL	76 Outperform	$10.24B	19.51	8.16%	―	13.63%	78.40%
BEKE	74 Outperform	$22.02B	34.85	6.53%	1.68%	34.99%	28.80%
CBRE	74 Outperform	$36.11B	36.99	12.15%	―	13.14%	1.70%
CWK	68 Neutral	$2.23B	13.91	9.53%	―	1.24%	1205.18%
CSGP	66 Neutral	$31.22B	257.45	1.47%	―	11.27%	-60.22%
Sector *	60 Neutral	$2.76B	10.59	0.51%	8507.90%	5.51%	-19.44%
NMRK	56 Neutral	$1.93B	26.66	5.32%	1.15%	13.87%	90.42%

* Real Estate Sector Average

Performance Comparison

CSGP

CoStar Group

74.61

-8.65

-10.39%

CBRE

CBRE Group

123.91

37.15

42.82%

JLL

Jones Lang Lasalle

222.45

25.95

13.21%

NMRK

Newmark Group

11.02

0.91

9.00%

CWK

Cushman & Wakefield

10.04

-0.57

-5.37%

BEKE

KE Holdings Inc. Sponsored ADR Class A

18.34

1.67

10.02%

CoStar Group Corporate Events

M&A Transactions

CoStar Group to Acquire Majority of Domain Holdings

Positive

May 9, 2025

On May 9, 2025, CoStar Group entered into a binding Scheme Implementation Deed with Domain Holdings Australia Limited to acquire the remaining 83% of Domain’s shares it does not already own, for a total cash consideration of $4.43 AUD per share. This acquisition, valued at approximately $2.3 billion AUD, is subject to various approvals and conditions, including shareholder and court approvals, and is expected to significantly impact CoStar Group’s market positioning by expanding its presence in the Australian real estate market.

Executive/Board ChangesBusiness Operations and Strategy

CoStar Group Revamps Board with New Appointments

Positive

Apr 7, 2025

On April 6, 2025, CoStar Group announced significant changes to its Board of Directors, adding John Berisford, Rachel Glaser, and Christine McCarthy as independent directors, while Michael Klein, Christopher Nassetta, and Laura Kaplan retired. Louise Sams was appointed as the new Chairperson of the Board. The company also established a Capital Allocation Committee to evaluate investments and financial targets, supported by agreements with D. E. Shaw and Third Point. These changes are part of CoStar’s efforts to enhance corporate governance and drive stockholder value.

M&A TransactionsBusiness Operations and Strategy

CoStar Group Completes Acquisition of Matterport

Positive

Feb 28, 2025

On February 28, 2025, CoStar Group completed its acquisition of Matterport, a leader in 3D digital twin technology, marking a significant step in advancing AI-driven real estate solutions. This merger aims to accelerate the adoption of digital twin technology across the global real estate sector, enhancing property insights and expanding the use of AI, computer vision, and machine learning, positioning the combined company at the forefront of real estate technology innovation.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.