CoStar Group, Inc.

Based on the provided data, here is a comprehensive analysis of CoStar Group (CSGP).

Technical Analysis The technical picture is severely bearish. The stock is in a steep, sustained downtrend, trading deep in oversold territory after losing over half its value from its peak. While its beta suggests lower volatility than the market, the magnitude of the decline points to significant company-specific issues driving the sell-off.

Fundamentals Fundamentals present a contradictory story. Top-line revenue is growing sequentially, underpinned by an excellent gross margin. However, profitability has sharply reversed into a net loss due to high operating expenses. The company is financially healthy with a strong liquidity position and low debt, but operational metrics like ROE and ROA indicate inefficient capital use.

Valuation Valuation metrics are extreme and highly speculative. The sky-high P/E and EV/EBITDA ratios indicate the market is pricing in dramatic future growth. While the low PEG ratio suggests this growth expectation could justify the premium, the stock's value is entirely contingent on the company achieving these aggressive forecasts, representing significant risk.

Risk The primary risk is a failure to restore profitability and meet the high growth expectations embedded in its valuation. The lack of short interest removes the risk of a short squeeze but does not mitigate the fundamental challenge of reversing the negative earnings trend.

Buy Recommendation

Based on this analysis, a buy recommendation is not warranted at this time. The combination of a severe technical downtrend, a recent lapse into unprofitability, and a valuation entirely dependent on speculative future growth creates an unfavorable risk/reward profile. Investors should wait for concrete evidence of a fundamental turnaround, such as a return to sustainable profitability and a stabilization in the share price, before considering a position. This is not investment advice, for reference only.

RockFlow Model Forecast: Three Scenarios for 2026

Based on the comprehensive analysis provided, here is a 12-month outlook for CoStar Group (CSGP):

Over the next 12 months, the stock's performance hinges entirely on the company's ability to execute a fundamental turnaround. The key catalyst would be concrete evidence of cost management restoring profitability while maintaining its strong revenue growth and gross margins, thereby justifying its speculative valuation. However, the primary risk remains the high probability of further downside if the company fails to meet the aggressive growth expectations embedded in its price, potentially leading to a significant de-rating. Without analyst consensus on a target price, the near-term path is highly uncertain, but a successful turnaround could see the stock stabilize and attempt to recover, while persistent losses likely perpetuate the current bearish trend.

Wall Street Consensus

Most Wall Street analysts are optimistic about CoStar Group, Inc.'s 12-month outlook, with consensus target around $49.07, indicating expected upside potential.

Overall, CSGP has investment potential but also faces challenges. Here are key factors to weigh before investing.

CSGP has delivered severely disappointing performance over the past year, characterized by a steep and sustained downturn that has substantially eroded shareholder value.

The stock has experienced dramatic short-term declines, falling over 25% in one month and nearly 30% over three months. Its significant underperformance relative to the market, by more than 30 percentage points, highlights severe company-specific challenges rather than broader market weakness.

Currently trading at $48.51, CSGP sits just 10.7% above its 52-week low and approximately 50% below its 52-week high, indicating it is deeply oversold despite its beta of 0.85 suggesting lower volatility than the market. The maximum drawdown of -53.54% over the past year underscores the magnitude of the sustained selling pressure.

Revenue & Profitability Revenue increased 6.7% sequentially from Q2 to Q3 2025, reaching $833.6 million. However, profitability deteriorated significantly with a negative operating margin of -6.1% and a net loss of $30.9 million, reversing the modest profit seen in Q2. The gross margin remains strong at 79.3%, but high operating expenses, particularly in sales and marketing, are pressuring bottom-line results.

Financial Health The company maintains a robust liquidity position with a current ratio of 3.12 and a cash ratio of 2.64, indicating substantial short-term financial flexibility. Debt levels are low, with a debt-to-equity ratio of 0.13, though the negative interest coverage ratio of -11.6 reflects the current lack of operating income to service interest expenses.

Operational Efficiency Operational metrics show challenges, with return on equity at -0.36% and return on assets at -0.29%, indicating inefficient use of capital. Asset turnover remains low at 0.077, suggesting suboptimal revenue generation from the asset base, while the cash conversion cycle of 6.3 days demonstrates efficient working capital management.

Based on CSGP's current price-to-earnings (TTM) ratio of 186.04, the stock appears significantly overvalued from a traditional earnings perspective. This is further supported by an exceptionally high EV/EBITDA ratio of over 1,174, indicating investors are paying a substantial premium for the company's operating cash flow. However, the Price/Earnings to Growth (PEG) ratio of 0.48 suggests the high P/E may be justified by very strong expected future earnings growth, potentially indicating a growth stock story.

A direct peer comparison is hindered by the unavailability of industry average data. Therefore, the assessment relies solely on the company's standalone metrics, which present a mixed picture. The high multiples signal extreme market expectations for future performance, making the valuation highly speculative and dependent on the company's ability to meet its aggressive growth forecasts.

Volatility Risk: With a beta of 0.85, CSGP demonstrates lower volatility than the broader market, suggesting less systematic risk exposure. However, the significant one-year maximum drawdown of -53.54% indicates the stock has experienced substantial peak-to-trough losses, pointing to high historical idiosyncratic risk and potential for severe price declines during adverse periods.

Other Risks: The absence of short interest suggests minimal speculative pressure from bearish investors, which can reduce the risk of a short squeeze event. This lack of negative sentiment, combined with the stock's likely high liquidity given its profile, provides a cushion, though the primary risk remains a potential reversal in the company's fundamental growth trajectory.