What to Expect From CoStar’s Upcoming Q2 Earnings?

Costar Group (NASDAQ:CSGP) reported Q3 earnings with an EPS of $0.30 and revenues of $625 million, reflecting a 12% increase year-over-year, aligning with market expectations. However, the company's shares saw a decline of over 8% in pre-market today due to its guidance not meeting anticipated numbers.

For Q4/23, Costar Group predicts an EPS between $0.31-$0.32, while market estimates stand at $0.35. The company also forecasts Q4 revenues to be between $630-$635M, whereas market consensus is at $644.5M.

For the entire year, Costar Group's anticipated EPS is between $1.21-$1.22, against the market expectation of $1.24. The company expects its annual revenues to lie between $2.445-$2.45 billion, slightly short of the market's prediction of $2.461B.

RBC Capital shared its outlook on CoStar Group, Inc. (NASDAQ:CSGP) for fiscal 2023, expecting revenue and EBITDA guidance to be in line with the Street estimates but EPS is likely to come in above the expectations.

According to the analyst, the company should deliver modest 2023 margin expansion as incremental residential investment, namely in content, technology, and Sales & Marketing expenses, is more than offset by operating leverage.

Defensive CoStar (Suite) and continued recovery in counter-cyclical Multifamily, where the analysts model a return to 20% growth by Q4/23, bode well for sustained 2023 revenue growth.

RBC Capital analysts provided their outlook on CoStar Group, Inc. (NASDAQ:CSGP) ahead of upcoming Q3 results, and raised their price target to $85 from $80, while maintaining their outperform rating.

The analysts expect a modest Q3/22 beat and guidance raise by the magnitude of the beat and look for any incremental color around 2023 investments. In addition, recent vacancy and rent data imply a continued recovery in Multifamily, and the analysts see the potential for a return to over 20% growth in the mid-term given the large penetration opportunity.

The analysts believe the defensive business model, strong pricing power, and counter-cyclical multifamily business should provide support to the stock in a volatile tape.

Analysts at RBC Capital released their outlook on CoStar Group, Inc. (NASDAQ:CSGP) ahead of the company’s upcoming Q2 earnings report on July 26, expecting a modest beat and guidance reiteration.

According to the analysts, Q2 could largely be a non-event, as investors are focused on longer-term residential strategy/investment as well as the continued Multifamily recovery, salesforce ramp, and sustainability of CoStar (Suite) growth.

CoStar growth is expected to accelerate to around 17% year-over-year in Q2, driven by upgrading customers to the full CoStar product offering and strong bookings growth. Although economic slowdown could potentially weigh on revenue growth, the analysts believe the impact will be delayed by the pricing increases and subscription-based revenue model.

Analysts RBC Capital provided their outlook on CoStar Group, Inc. (NASDAQ:CSGP) ahead of the company’s Q1 results, mentioning that residential strategy/investments, Apartments.com turnaround in H2/22, and hiring and ramping up of the salesforce continue to be key areas of focus.

Accordingly, the Q1/22 results, where the analysts expect a modest beat and the company to reiterate guidance, could potentially be a non-event. The March 9th Sell-side Analyst Day provided insights into the residential strategy; however, monetization won't happen till late 2023/early 2024.

Lastly, the analysts monitor the potential impact to high valuation stocks in the rising rate environment, however, a subscription-based revenue model with strong pricing increases in CoStar and Apartments.com bodes well with concerns around an economic slowdown.