CoStar Group
CSGP
$28.76
-2.38%
CoStar Group is a global provider of proprietary information, analytics, and online marketplaces for commercial and residential real estate, operating brands like CoStar Suite, LoopNet, Apartments.com, and Homes.com. As the industry's most comprehensive centralized real estate database, it functions as a critical information utility for brokers, lenders, and owners worldwide. The current investor narrative centers on the company's aggressive push into the residential brokerage market via Homes.com, which has driven revenue growth but also compressed margins due to heavy marketing spending. Debate surrounds whether this residential expansion can generate sustainable long-term value or if it will continue to weigh on profitability.…
CSGP
CoStar Group
$28.76
CSGP 12-Month Price Forecast
Wall Street consensus
Most Wall Street analysts maintain a constructive view on CoStar Group's 12-month outlook, with a consensus price target around $37.20 and implied upside of +29.4% versus the current price.
Average Target
$37.20
0 analysts
Implied Upside
+29.4%
vs. current price
Analyst Count
—
covering this stock
Price Range
$25 - $53
Analyst target range
The stock is covered by 20 analysts, with a consensus recommendation of Buy (mean score 1.86 on a 1-5 scale). The average target price is $43.95, implying 58.9% upside from the current price of $27.66. The distribution shows a bullish lean, with recent actions including upgrades from Baird (Neutral) and maintained Outperform from Keefe, Bruyette & Woods. The target range spans from $26.00 (low) to $70.00 (high), a wide spread of $44, reflecting high uncertainty. The low target of $26 suggests downside risk if margin compression persists, while the high target of $70 assumes successful execution of the residential strategy and margin recovery. Recent downgrades from Baird (Outperform to Neutral) and maintained Underweight from Wells Fargo indicate some caution, but the overall consensus remains positive.
Bulls vs Bears: CSGP Investment Factors
CSGP presents a high-risk, high-reward profile. The bull case rests on accelerating revenue growth (22.5% YoY), a dominant market position, and analyst consensus expecting 59% upside. However, the bear case is equally compelling: negative operating margins, extreme valuation (P/S 8.6x vs industry 4x), and a 70% stock decline over the past year. The central tension is whether the Homes.com residential expansion can achieve sustainable profitability—if margins recover, the forward P/E of 15.6x suggests deep value; if not, the stock could fall to the analyst low target of $26. Currently, the bearish evidence is stronger given the lack of profitability and premium valuation, but the potential reward is substantial if the turnaround succeeds.
Bullish
- Accelerating Revenue Growth: Revenue grew 22.5% YoY to $897M in Q1 2026, accelerating from 15.1% growth in Q1 2025, driven by the residential segment's $425M contribution surpassing commercial's $331M. This demonstrates successful execution of the Homes.com strategy.
- High Gross Margin Resilience: Gross margin remained strong at 78.2% in Q1 2026, only slightly down from 79.1% a year earlier, indicating the core data subscription business retains pricing power and scalability despite heavy investment.
- Analyst Consensus Buy with 59% Upside: 20 analysts rate CSGP a Buy with a mean target of $43.95, implying 58.9% upside from $27.66. The high target of $70 suggests potential for significant gains if margin recovery materializes.
- Healthy Balance Sheet: Debt-to-equity is only 0.14 and current ratio is 2.84, providing financial flexibility to fund the residential expansion without distress. Free cash flow turned positive to $98M in Q1 2026 from -$150.6M in Q4 2025.
Bearish
- Negative Operating Margins: Operating margin was -2.2% in Q1 2026 due to $421M in selling and marketing expenses, which consumed 47% of revenue. This shows the residential push is deeply unprofitable at the operating level.
- Extreme Valuation Premium: P/S ratio of 8.6x is 115% above the industry average of ~4x, and trailing P/E of 4,002x is near the top of its 5-year range (62x-1,432x). The market is pricing in a dramatic earnings recovery that may not materialize.
- Severe Stock Price Decline: CSGP has fallen 70.2% over the past year, underperforming the S&P 500 by 86.7 percentage points. The stock is near its 52-week low of $26.68, indicating persistent selling pressure and negative momentum.
- Minimal Net Income: Net income was only $3M in Q1 2026, down from $47M in Q4 2025, and ROE is negligible at 0.08%. The company is barely profitable despite $897M in revenue, leaving no margin for error.
CSGP Technical Analysis
CSGP is in a severe downtrend, with the stock price declining 70.2% over the past year. The current price of $27.66 sits at just 28.4% of its 52-week range (low $26.68, high $97.43), indicating it is near the bottom of its range. This positioning suggests the stock is deeply oversold and potentially offering a value opportunity, but the persistent downward momentum warns of a falling knife scenario. The 1-year price change of -70.2% versus the S&P 500's +16.5% highlights extreme relative weakness, with a relative strength of -86.7% over the same period.
Beta
0.73
0.73x market volatility
Max Drawdown
-72.0%
Largest decline past year
52-Week Range
$26-$97
Price range past year
Annual Return
-69.8%
Cumulative gain past year
| Period | CSGP Return | S&P 500 |
|---|---|---|
| 1m | -2.0% | +0.2% |
| 3m | -17.2% | +3.7% |
| 6m | -53.2% | +8.0% |
| 1y | -69.8% | +18.2% |
| ytd | -56.2% | +9.6% |
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CSGP Fundamental Analysis
Revenue has grown strongly, with Q1 2026 revenue of $897 million up 22.5% year-over-year, accelerating from the 15.1% growth in Q1 2025. The residential segment contributed $425 million, surpassing the commercial segment's $331 million, indicating the Homes.com strategy is driving top-line expansion. However, the company remains barely profitable, with net income of just $3 million in Q1 2026, a sharp decline from $47 million in Q4 2025. Gross margin remains high at 78.2%, but operating margin turned negative at -2.2% due to heavy selling and marketing expenses of $421 million. The balance sheet is healthy with a current ratio of 2.84 and debt-to-equity of only 0.14, but free cash flow was negative $150.6 million in Q4 2025, though it improved to $98 million in Q1 2026. ROE is negligible at 0.08%, reflecting the low net income relative to equity.
Quarterly Revenue
$897000000.0B
2026-03
Revenue YoY Growth
+22.5%
YoY Comparison
Gross Margin
78.1%
Latest Quarter
Free Cash Flow
$241300000.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is CSGP Overvalued?
Given positive net income of $3 million, the trailing P/E of 4,002x is the primary metric, but it is distorted by minimal earnings. The forward P/E of 15.6x is far more meaningful, implying the market expects a sharp earnings recovery. The P/S ratio of 8.6x is elevated versus the industry average of approximately 4x, representing a 115% premium. This premium may be justified by CoStar's dominant market position and 22.5% revenue growth, but it also prices in optimistic margin expansion. Historically, the trailing P/E has ranged from 62x to 1,432x over the past five years, and the current 4,002x is near the top of that band, signaling that the market is pricing in a dramatic earnings turnaround.
PE
4002.4x
Latest Quarter
vs. Historical
High-End
5-Year PE Range 62x~153x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
100.9x
Enterprise Value Multiple
Investment Risk Disclosure
Financial & Operational Risks: CSGP's primary financial risk is its negative operating margin of -2.2% in Q1 2026, driven by $421M in selling and marketing expenses that represent 47% of revenue. Net income of just $3M on $897M revenue leaves a razor-thin profit cushion, and free cash flow was negative $150.6M in Q4 2025 before improving to $98M in Q1 2026. The company's high gross margin of 78.2% is offset by heavy spending, and any revenue deceleration could quickly lead to losses. Debt is low at 0.14 D/E, but the lack of profitability limits financial flexibility.
Market & Competitive Risks: The stock trades at a P/S of 8.6x, a 115% premium to the industry average of 4x, making it vulnerable to multiple compression if growth slows. With a beta of 0.735, CSGP is less correlated to the market but still sensitive to real estate cycles. The residential market faces competition from Zillow and Realtor.com, and the commercial segment could be impacted by a downturn in property transactions. The 70% price decline over the past year reflects severe negative sentiment, and the stock's relative strength of -86.7% versus the S&P 500 indicates persistent underperformance.
Worst-Case Scenario: If Homes.com fails to gain traction and margins remain negative, the stock could fall to the analyst low target of $26.00, representing a 6% downside from the current $27.66. However, if the company reports a loss and cuts guidance, the stock could revisit its 52-week low of $26.68 or even break below, implying a potential loss of up to 10-15%. The maximum drawdown over the past year was -71.97%, so a repeat of that magnitude would bring the stock to around $7.75, but that is unlikely given the balance sheet strength.