Real Estate

Market Analysts Increase Compass Revenue Forecast To $6.3B

After solid second-quarter earnings, investment analysts are predicting Compass’ stock will rise back to the level of its initial public offering performance.

After two quarters of topsy-turvy stock market results, Compass’ fortunes may be turning around.

Seven analysts — from Morgan Stanley, Deutsche Bank, Goldman Sachs, Needham, Barclays, and Loop Capital — released updated forecasts on Monday that revealed a more bullish approach to the New York-based brokerage’s future on the exchange (NYSE:COMP) after a solid second-quarter earnings report.

Investment analysts now predict Compass will rake in $6.3 billion this year — a 15 percent increase from the last set of forecasts after the brokerage’s first-quarter earnings results in May. In addition to a solid revenue increase, analysts expect the loss per share to narrow 44 percent to $1.84.

“Shareholders in Compass, Inc. may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts,” investing platform Simply Wall Street said of the upgrades on Nasdaq’s blog. “The consensus-estimated revenue numbers rose, with their view now clearly much more bullish on the company’s business prospects.”

From April to June, Compass boosted its revenue a whopping 186 percent year over year to $1.95 billion and sliced its net losses from $84 million in Q2 2020 to $7.1 million in Q2 2021. The company also increased its closed transaction volume 140 percent annually to 65,743 and nearly doubled its market share.

Compass’ stock market performance over the past month. Credit: MarketWatch

In the hours after the release, the brokerage experienced a minimal stock market boost with the price per share rising from $15.28 at close to $16 in after-hours trading on Aug. 9. The company’s price per share had been trading in the $13 range for much of July, with prices reaching as low as $12.74.

Credit: CNN Money

Compass finally broke $17 per share again on Monday, which matches investment analysts’ current lowest consensus target price, according to CNN Money. The highest target price came in at $28 while the median estimate remained steady at $23 — which Simply Wall Street said is a reflection of lingering profitability concerns.

“There was no major change to the consensus price target, perhaps suggesting that the analysts remain concerned about ongoing losses despite the improved earnings and revenue outlook,” Simply Wall Street explained. “Fixating on a single price target can be unwise though since the consensus target is effectively the average of analyst price targets.”

Although it’ll take another year to see if Compass will reach its adjusted EBITDA profitability goal, the majority of analysts are giving the brokerage a “buy” rating, with only two classifying it as a “hold.” Simply Wall Street said it might be time to give Compass stock “another look,” as their “sales are expected to grow faster than the wider market.”

Yahoo! analyst Thomas Hughes said Compass is poised to near its IPO price per share by the end of the year, with the company’s ability to stay trading above the $16 range in the coming months being the bellwether.

“If support is able to hold at the $16 level, we see this stock moving up to the $20 level at least,” he said last Wednesday. “Looking forward, strong results in the third and fourth quarter are expected and should help lift price action above the $20 level and up to new highs by the end of the year.”

Email Marian McPherson

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