Strategic Acquisition Fuels CoStar’s Growth and Synergy Potential: A Buy Rating

In a report released on April 22, Jeffrey Meuler from Robert W. Baird maintained a Buy rating on CoStar Group (CSGP – Research Report), with a price target of $105.00.

Jeffrey Meuler’s rating is based on CoStar Group’s strategic acquisition and its potential to realize synergies from this deal. The purchase of Matterport, an industry leader in creating photorealistic 3D visual representations of spaces, is seen as a strong product and capability fit for CoStar, which is already a user of Matterport’s services. Meuler recognizes the acquisition as an opportunity for CoStar to leverage its scaled distribution and expects cost synergies even before reinvestment, suggesting an enhanced value proposition for CoStar’s offerings.

Moreover, the financials surrounding the acquisition seem promising, with the purchase price at approximately nine times Matterport’s estimated 2024 revenue, which is expected to grow year-over-year. Matterport is also on the cusp of generating positive operating cash flow, indicating financial stability that could complement CoStar’s growth trajectory. Meuler anticipates that CoStar will integrate Matterport’s capabilities into its products, potentially introducing differentiated offerings and supporting premium tiers. All these factors contribute to a positive outlook on CoStar’s stock, leading to Meuler’s Buy rating.

In another report released yesterday, Bank of America Securities also reiterated a Buy rating on the stock with a $111.00 price target.

TipRanks tracks over 100,000 company insiders, identifying the select few who excel in timing their transactions. By upgrading to TipRanks Premium, you will gain access to this exclusive data and discover crucial insights to guide your investment decisions. Begin your TipRanks Premium journey today.

CoStar Group (CSGP) Company Description:

Founded in 1987, CoStar Group, Inc. is based in the District of Columbia and provides information, analytics, and marketing services to the commercial real estate industry. The company offers its services through three divisions: Information and analytics, Online marketplaces, and Commercial property and land.