CoStar Group, Inc. Just Beat EPS By 28%: Here's What Analysts Think Will Happen Next
It's been a good week for CoStar Group, Inc. (NASDAQ:CSGP) shareholders, because the company has just released its latest first-quarter results, and the shares gained 9.2% to US$648. It looks like a credible result overall - although revenues of US$392m were what the analysts expected, CoStar Group surprised by delivering a (statutory) profit of US$1.98 per share, an impressive 28% above what was forecast. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
See our latest analysis for CoStar Group
Following the latest results, CoStar Group's twelve analysts are now forecasting revenues of US$1.58b in 2020. This would be a credible 7.8% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to sink 18% to US$6.79 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$1.62b and earnings per share (EPS) of US$7.02 in 2020. The analysts are less bullish than they were before these results, given the reduced revenue forecasts and the small dip in earnings per share expectations.
The analysts made no major changes to their price target of US$702, suggesting the downgrades are not expected to have a long-term impact on CoStar Group'svaluation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic CoStar Group analyst has a price target of US$755 per share, while the most pessimistic values it at US$612. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's pretty clear that there is an expectation that CoStar Group's revenue growth will slow down substantially, with revenues next year expected to grow 7.8%, compared to a historical growth rate of 17% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 5.3% next year. So it's pretty clear that, while CoStar Group's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. They also downgraded their revenue estimates, although industry data suggests that CoStar Group's revenues are expected to grow faster than the wider industry. The consensus price target held steady at US$702, with the latest estimates not enough to have an impact on their price targets.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple CoStar Group analysts - going out to 2024, and you can see them free on our platform here.
Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.
