CoStar Group, Inc. (CSGP), headquartered in Washington, D.C., operates in the real estate sector. The company provides information, analytics, and online marketplace services to real estate professionals. With a market cap of $30.3 billion, CoStar’s services span various countries in the Americas, Europe, and Asia. Its services include marketplaces for leasing and selling, sales comparable information, tenant information, marketing, industry news, and more.
Companies worth $10 billion or more are generally described as “large-cap stocks,” CoStar fits right into that category, with its market cap exceeding this threshold, reflecting its substantial size, influence, and dominance in the real estate services industry. CoStar Group's large-cap status hinges on market leadership, strong brands, a subscription-based revenue model, a comprehensive property database, valuable analytics, loyal customers, and international expansion into Canada, the UK, Spain, and France.
Despite its strengths, CoStar witnessed a notable dip, slipping 26% from its 52-week high of $100.38 achieved on March 18. CSGP stock plunged 22.8% over the past three months, substantially lagging behind the Nasdaq Composite’s ($NASX) 8.9% gains during the same time frame.
In the longer term, CSGP stock is down 15.3% on a YTD basis and 17.1% over the past 52 weeks, underperforming the Nasdaq Composite’s 19% surge in 2024 and 31.7% returns over the past year.
To confirm the bearish trend, CoStar has traded below its 50-day moving average since early May and below its 200-day moving average since late May.
CoStar operates in a highly competitive space with numerous players competing to increase their market share. Due to this, the company increased its selling and marketing expenses by 61.8% annually in fiscal Q1, which led to a decrease in net income by 92.3%, even though CoStar reported a revenue of $656.4 million, up 12.3%. Additionally, to maintain the technological edge CoStar’s expense on software development increased by 23.7%.
Despite exceeding Street estimates for both revenue and EPS, CoStar Group's stock fell marginally on April 23 following the Q1 earnings release but rebounded with an 8.7% increase in the next trading session.
In the real estate tech market, Zillow Group, Inc. (ZG) emerges as a stealthy contender, stealing the spotlight from CoStar Group. Shares of Zillow dipped 11.4% over the year, outshining CoStar. But 2024 tells a different story. Zillow's 19.8% drop eclipses CoStar's mid-teen decline.
Wall Street analysts are moderately bullish on CoStar’s prospects. The stock has a consensus “Moderate Buy” rating from the 14 analysts covering it, and the mean price target of $104.08 suggests a potential upside of 40.2% from current price levels.
On the date of publication, Sristi Jayaswal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
