Opendoor Technologies: Hold Rating with Cautious Optimism Amid Market Volatility

In a report released today, Benjamin Black CFA from Deutsche Bank maintained a Hold rating on Opendoor Technologies (OPEN – Research Report), with a price target of $2.40.

Benjamin Black CFA has given his Hold rating due to a combination of factors related to Opendoor Technologies’ performance and market conditions. The company demonstrated a strong first quarter, surpassing both Deutsche Bank and street estimates in terms of the number of homes sold, which contributed to better-than-expected margins and EBITDA. Particularly, the contribution profit from newer property acquisitions post second quarter of 2022 has been significant, pushing the margins close to the company’s yearly target range. Additionally, the company exhibited cost discipline and a strategic approach to home acquisition, aiming for a monthly turnover of 2,200 homes to reach a breakeven point in adjusted net income.
Despite the positive aspects, the HOLD rating also reflects caution due to broader market uncertainties, including mortgage rate volatility and the potential impact on transaction velocity. Furthermore, while OPEN’s home acquisitions have shown year-over-year growth, they still fell short of expectations. Black also notes that while the National Association of Realtors (NAR) settlement could lead to industry-wide lower commissions, benefitting Opendoor, there remains a need for further evidence of a pickup in transaction velocity to warrant a more favorable rating. The reduction in the price target to $2.40, from the previous $4.00, also reflects these concerns, highlighting the more uncertain macroeconomic environment OPEN faces.

In another report released on May 3, Morgan Stanley also maintained a Hold rating on the stock with a $3.15 price target.

Based on the recent corporate insider activity of 85 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of OPEN in relation to earlier this year.

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Opendoor Technologies (OPEN) Company Description:

Social Capital Hedosophia Holdings Corp II is a blank check company. It is formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses.