CoStar (CSGP) Completes OnTheMarket Deal, Expands in the U.K.
CoStar Group CSGP completed the previously announced acquisition of OnTheMarket plc, one of the U.K.’s three most visited residential property portals.
The acquisition expands CoStar’s footprint in the United Kingdom. OnTheMarket has more than 13,000 agent advertisers and attracts high-intent leads at a fraction of the cost of other U.K. portals.
CoStar benefits from an expanding global addressable market for real estate information and marketplaces, which is estimated to be greater than $100 billion. The company is expanding its international footprint. It already has operations in 15 countries globally, including the United Kingdom, Spain, Germany and France.
CoStar is also gaining market share in North America. It estimates the total North American addressable market to be roughly $40 billion. Market share for CoStar, Apartments.com, LoopNet, Homes.com and TenX is estimated to be $4 billion, $9 billion, $5 billion, greater than $15 billion and $6 billion, respectively.
CoStar Group, Inc. Price and Consensus
CoStar Group, Inc. price-consensus-chart | CoStar Group, Inc. Quote
CoStar’s Prospects Ride on Increasing Traffic
CoStar shares have returned 5.2% in the past three months, outperforming the Zacks Computer & Technology sector’s growth of 5%.
CoStar is benefiting from increasing traffic at its sites, including Apartments.com (45 million average monthly unique), LoopNet (14 million unique visitors worldwide), Homes.com (more than 100 million monthly unique visitors) and a strong subscriber base at CoStar (more than 180K).
Thanks to Apartments.com’s growing traffic, the company expects Multifamily's year-over-year revenue growth rate to accelerate for 2023. Moreover, Apartments.com is currently the largest business by revenue and is on track to reach a billion dollars in revenue run rate in the first quarter of 2024.
Guidance Positive
CoStar expects 2023 revenues between $2.445 billion and $2.450 billion, indicating year-over-year growth of approximately 12% at the midpoint. The Zacks Consensus Estimate for revenues is pegged at $2.45 billion, indicating 12.29% growth from 2022.
Commercial information and marketplace business is expected to deliver revenue growth of 14% for 2023.
Moreover, fourth-quarter 2023 revenues are expected to be between $630 million and $635 million, indicating growth of approximately 10% at the mid-point. The consensus mark for revenues is pegged at $633.06 million, suggesting 10.41% year-over-year growth.
Commercial information and marketplace business is expected to deliver 12% year-over-year revenue growth in the fourth quarter of 2023.
Earnings are expected between $1.21 and $1.22 per share for 2023. Moreover, earnings are projected to be between 31 cents and 32 cents per share for the fourth quarter.
The Zacks Consensus Estimate for 2023 earnings is pegged at $1.21 per share, unchanged over the past 30 days. The consensus mark for fourth-quarter 2023 is pegged at 32 cents per share, unchanged over the same timeframe.
Zacks Rank & Stocks to Consider
CoStar currently has a Zacks Rank #4 (Sell).
Intel INTC, Badger Meter BMI and Ceridian HCM CDAY are some better-ranked stocks in the broader sector, each currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Intel shares have gained 14% in the past three months. The long-term earnings growth rate is pegged at 14.18%.
Badger Meter shares have declined 4.8% in the past three months. The long-term earnings growth rate is pegged at 20.39%.
Ceridian shares have lost 9.3% over the same timeframe. The long-term earnings growth rate is pegged at 44.15%.
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