Morningstar reduced CoStar Group’s fair value estimate to $57. This follows a previous reduction from $76 to $66 after the company's first-quarter earnings report.
Analysts attribute the adjustment to heavy capital allocation toward the Homes.com residential platform. Investors remain concerned regarding the timeline for achieving profitability within that segment.
The valuation cut occurs despite strong first-quarter financial performance. Revenue increased 23% to $897 million. Adjusted EBITDA nearly doubled to $132 million during the period.