CoStar Group
CSGP
$27.66
+1.02%
CoStar Group is a global provider of proprietary information, analytics, and online marketplaces serving both commercial and residential real estate, operating brands including CoStar Suite, LoopNet, Apartments.com, and Homes.com. The company functions as a critical information utility for brokers, lenders, and property owners, monetizing its comprehensive centralized real estate database through high-margin software-as-a-service subscriptions and premium advertising. The current investor narrative is dominated by a severe derating of the shares, which have fallen roughly 67% over the past year, as the market questions the profitability of the company's aggressive expansion into residential real estate through Homes.com. Recent quarterly results show a return to positive net income and accelerating revenue growth, but heavy spending on sales and marketing, a string of analyst downgrades in July 2026, and a deeply negative relative strength profile versus the S&P 500 have kept sentiment firmly bearish.…
CSGP
CoStar Group
$27.66
Investment Opinion: Should I buy CSGP Today?
The synthesized recommendation is Hold. The core thesis is that CoStar's fundamental business remains healthy with 18.4% revenue growth and a 74.8% gross margin, but the market is demanding proof that the heavy investment in Homes.com will translate into sustainable earnings and cash flow. The analyst consensus rating is 'buy' with an average target price of $37.30, implying 36.2% upside, but the recent wave of downgrades and the stock's severe downtrend suggest caution.
Supporting evidence for a Hold includes: 1) Revenue growth of 18.39% YoY in Q2 2026, accelerating from prior quarters; 2) A forward PE of 15.41x, which is below the broader market average and suggests the stock is not expensive on normalized earnings; 3) A strong balance sheet with debt-to-equity of 0.137 and $1.266B in cash; and 4) The stock trades at 8.63x sales, near the bottom of its historical range (55.4x in Q4 2023, 31.2x in Q4 2025). However, profitability is thin (net margin 5.95%) and free cash flow is erratic ($12M in Q2 2026).
The biggest risks that could invalidate the thesis are: 1) Continued margin compression if Homes.com spending does not yield returns; 2) A breakdown below the 52-week low of $25.89, which could trigger further selling; and 3) A broader commercial real estate slowdown impacting the core business. The rating would upgrade to Buy if the company demonstrates sustained margin expansion and positive free cash flow inflection, or if the stock price stabilizes above $32-$34 resistance. It would downgrade to Sell if revenue growth decelerates below 10% or if free cash flow turns persistently negative. Relative to its history and peers, the stock appears undervalued on a sales basis but fairly valued on forward earnings, given the execution risks.
Sign up to view all
CSGP 12-Month Price Forecast
CoStar presents a classic value vs. growth dilemma: the core business is growing at a healthy clip with high gross margins and a strong balance sheet, but the residential expansion is consuming significant resources and depressing near-term profitability. The forward PE of 15.4x suggests the market is pricing in a successful earnings inflection, but the erratic free cash flow and thin net margin indicate execution risk. The analyst consensus is bullish on paper, but the recent downgrades and negative price momentum suggest the market is losing patience. I would upgrade to bullish if the company demonstrates two consecutive quarters of operating margin expansion and positive free cash flow, and downgrade to bearish if revenue growth falls below 10% or if free cash flow turns persistently negative.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on CoStar Group's 12-month outlook, with a consensus price target around $37.30 and implied upside of +34.9% versus the current price.
Average Target
$37.30
0 analysts
Implied Upside
+34.9%
vs. current price
Analyst Count
—
covering this stock
Price Range
$25 - $53
Analyst target range
Coverage on CoStar is robust, with 20 analysts contributing to the consensus. The distribution of ratings is mixed but leans constructive: the consensus recommendation is "buy" with a recommendation mean of 2.10 (where 1.0 is a strong buy and 3.0 is a hold), and the average price target is $37.30. Against the current price of $27.38, that implies upside of approximately 36.2% to the consensus target. However, the sentiment is clearly deteriorating — the institutional ratings history shows a wave of downgrades around the July 29, 2026 earnings date, with Keefe Bruyette & Woods cutting to Market Perform from Outperform, William Blair moving to Market Perform from Outperform, Citigroup downgrading to Neutral from Buy, and Baird cutting to Neutral from Outperform on July 14, 2026. The consensus is therefore best characterized as cautiously bullish on paper but actively losing conviction in practice. The target range is wide, spanning from a low of $25.00 to a high of $53.00 — a spread of 112% between the extremes, which signals unusually high uncertainty about the company's earnings trajectory. The low target of $25.00 sits just below the current 52-week low of $25.89 and implies roughly 8.7% downside, pricing in continued margin compression, further residential investment without payoff, and possibly a broader commercial real estate slowdown. The high target of $53.00 implies roughly 93.6% upside and would require the market to regain confidence in the Homes.com profitability roadmap, a return to margin expansion, and multiple re-rating toward the company's historical sales multiple. The consensus EPS estimate of $3.46 (range $3.40-$3.52) and revenue estimate of $5.57 billion (range $5.50-$5.65 billion) are tightly clustered, indicating analysts broadly agree on near-term fundamentals but disagree sharply on what those fundamentals are worth — a classic setup for elevated volatility around future earnings reports.
Bulls vs Bears: CSGP Investment Factors
The bear case currently has stronger evidence due to the severe price downtrend, negative relative strength, and a wave of analyst downgrades. However, the bull case rests on tangible fundamentals: 18.4% revenue growth, a 74.8% gross margin, a fortress balance sheet, and a forward PE of 15.4x that is undemanding if earnings normalize. The single most important tension is whether the heavy investment in Homes.com will eventually produce the earnings inflection that justifies the forward estimates, or whether it will continue to depress margins and cash flow, leading to further multiple compression. Until there is clear evidence of margin expansion and positive free cash flow inflection, the market is likely to remain skeptical.
Bullish
- Revenue growth reaccelerating: Q2 2026 revenue of $925M grew 18.39% YoY, accelerating from Q1 2026's $897M and well above Q2 2025's $781.3M. This demonstrates resilient demand for CoStar's data and marketplace services despite the stock's collapse.
- Forward PE of 15.4x is undemanding: Based on consensus FY EPS of $3.46, the forward PE is 15.41x, below the broader market average and a fraction of the trailing PE of 4,002x. If earnings normalize, the stock is inexpensive.
- Fortress balance sheet: Debt-to-equity is just 0.137, the current ratio is 2.84, and the company holds $1.266B in cash. This provides ample liquidity to fund the Homes.com expansion without financial distress.
- Analyst target implies 36% upside: The consensus average price target of $37.30 implies 36.2% upside from the current $27.38, and the high target of $53.00 implies 93.6% upside. The consensus recommendation is 'buy' with a mean of 2.10.
Bearish
- Severe price downtrend: The stock is down 67.37% over the past year and 58.32% YTD, with a maximum drawdown of -70.16%. It trades just 2.5% above its 52-week low of $25.89, indicating persistent distribution and no durable base.
- Analyst downgrades signal lost conviction: In July 2026, Keefe Bruyette & Woods, William Blair, Citigroup, and Baird all downgraded the stock to neutral or market perform. This wave of downgrades around the Q2 earnings date reflects growing skepticism about the residential expansion.
- Thin and erratic profitability: Q2 2026 net margin was only 5.95%, and operating margin was 8.22%, but Q1 2026 operating margin was just 0.33% and three of the prior four quarters were negative. TTM FCF is $312M, but Q2 2026 FCF was only $12M after $103M capex.
- Heavy spending on Homes.com: Selling and marketing expenses consumed $395M (42.7% of revenue) in Q2 2026, and R&D added $107M. This spending is necessary to build the residential marketplace but is crushing near-term margins and cash flow.
CSGP Technical Analysis
CoStar is in a sustained, severe downtrend. The stock has fallen 67.37% over the past year and 58.32% year-to-date, with a maximum drawdown of -70.16% from its peak. At the current price of $27.38, the stock is trading at just 2.5% above its 52-week low of $25.89 and 67.9% below its 52-week high of $85.24, placing it in the bottom 3% of its 52-week range — a positioning that reflects persistent distribution and offers no evidence of a durable base. Recent momentum remains negative and is diverging from the broader market: the stock is down 12.41% over the past month versus a +0.59% gain for SPY, and down 8.73% over three months versus +3.34% for SPY. The 1-month decline is steeper than the 3-month decline, indicating that selling pressure has actually accelerated recently rather than stabilized, while the 6-month change of -31.46% confirms the weakness is structural, not a brief pullback. Relative strength versus SPY is negative across every timeframe, with a 1-month reading of -13.00 and a 1-year reading of -82.38, underscoring that capital is actively rotating away from this name. Key technical levels are well defined: the 52-week low at $25.89 is the critical support zone, and a breakdown below it would likely trigger further momentum-driven selling and open the door to new lows. To the upside, the 52-week high at $85.24 is far out of reach, and meaningful resistance would first be encountered in the $32-$34 area where the stock repeatedly failed during the summer. With a beta of 0.747, the stock is roughly 25% less volatile than the broader market, which is somewhat unusual for a name in such a steep decline and suggests the selling is driven by company-specific fundamentals rather than broad market beta; for risk management, this lower beta means position sizing can be somewhat larger for a given dollar risk, but the strong negative relative strength argues against bottom-fishing until price action confirms a reversal.
Beta
0.80
0.80x market volatility
Max Drawdown
-69.9%
Largest decline past year
52-Week Range
$26-$85
Price range past year
Annual Return
-67.4%
Cumulative gain past year
| Period | CSGP Return | S&P 500 |
|---|---|---|
| 1m | -10.5% | +0.6% |
| 3m | -7.4% | +3.6% |
| 6m | -28.7% | +14.6% |
| 1y | -67.4% | +15.8% |
| ytd | -57.9% | +13.6% |
Bobby - Your AI Investment Partner
Get real-time data, AI-driven personalized investment analysis to make smarter investment decisions
CSGP Fundamental Analysis
CoStar's revenue trajectory is reaccelerating even as the stock collapses. Q2 2026 revenue came in at $925 million, up 18.39% year-over-year, an acceleration from Q1 2026's $897 million and a clear step up from the $781.3 million reported in Q2 2025. The sequential progression over the past four quarters — $833.6 million (Q3 2025), $900 million (Q4 2025), $897 million (Q1 2026), and $925 million (Q2 2026) — shows a business that is still growing at a healthy clip, with the commercial real estate segment contributing $337 million of the most recent quarter's revenue. The disconnect between double-digit top-line growth and a 67% share price decline implies the market is not questioning demand but rather the cost of capturing it, particularly the heavy investment behind the residential Homes.com marketplace. Profitability is thin but improving. Q2 2026 net income was $55 million, a 5.95% net margin, up sharply from just $3 million in Q1 2026 and a loss of $30.9 million in Q3 2025. Gross margin remains robust at 74.81% in Q2 2026, though it has drifted lower from the 79-80% levels seen in 2024, reflecting a mix shift toward lower-margin advertising and residential marketplace revenue. The operating margin is the pressure point: it was 8.22% in Q2 2026 but only 0.33% in Q1 2026 and negative in three of the prior four quarters, as selling and marketing expenses alone consumed $395 million (42.7% of revenue) in Q2 2026 and research and development added another $107 million. The balance sheet is a genuine strength. Debt-to-equity is just 0.137, the current ratio is a healthy 2.84, and the company holds $1.266 billion in cash against minimal leverage. However, free cash flow has become erratic: trailing-twelve-month FCF is $312 million, but Q2 2026 FCF was only $12 million after $103 million of capital expenditures, and Q4 2025 FCF was negative $150.6 million. Return on equity is a negligible 0.084% and ROA is 0.47%, reflecting the enormous capital base relative to current earnings. The company is funding its expansion internally and through modest buybacks ($84 million repurchased in Q2 2026), but the thin FCF conversion and heavy capex mean the margin for error is limited if revenue growth were to stall.
Quarterly Revenue
$925000000.0B
2026-06
Revenue YoY Growth
+18.4%
YoY Comparison
Gross Margin
74.8%
Latest Quarter
Free Cash Flow
$312000000.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
Open an Account, get $2 TSLA now!
Valuation Analysis: Is CSGP Overvalued?
Because CoStar's trailing net income is barely positive (EPS of $0.00025), the trailing PE ratio of 4,002x is economically meaningless and should be disregarded. The appropriate primary metric is the forward PE ratio of 15.41x, which is based on consensus estimated EPS of $3.46 for the coming year, or alternatively the price-to-sales ratio of 8.63x. The enormous gap between the trailing PE (4,002x) and forward PE (15.4x) implies the market expects a dramatic earnings inflection — essentially a full normalization of margins — which is a very high bar and explains much of the stock's skepticism. Relative to the real estate services sector, CoStar's 8.63x price-to-sales ratio and 3.36x price-to-book ratio represent a premium to typical property services peers, though the forward PE of 15.4x is below the broader market average. The premium on sales is arguably justified by CoStar's 74.8% gross margin and its unique data-utility competitive position, but the market is clearly unwilling to pay up until the earnings inflection is demonstrated rather than forecast. On EV/EBITDA of 100.9x, the stock looks extraordinarily expensive on current cash earnings, but this metric is distorted by the depressed EBITDA base of $157 million in Q2 2026. Historically, CoStar's price-to-sales ratio has compressed dramatically: it stood at 55.4x in Q4 2023, 44.3x in Q3 2024, and 31.2x in Q4 2025, versus 8.63x today. Similarly, the price-to-book ratio has fallen from 4.83x in Q4 2023 to 3.36x now, and the historical PE ranged from 62x to 145x in 2022-2024 before becoming meaningless. This places the stock at the very bottom of its own historical valuation band on a sales basis, which could signal either a deep value opportunity or a permanent de-rating if the residential expansion fails to deliver the expected earnings leverage.
PE
4002.4x
Latest Quarter
vs. Historical
High-End
5-Year PE Range 51x~153x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
100.9x
Enterprise Value Multiple
Investment Risk Disclosure
CoStar faces significant financial and operational risks. The company's profitability is thin and volatile: Q2 2026 net margin was 5.95%, but Q1 2026 net margin was just 0.33%, and three of the prior four quarters were negative. Free cash flow is erratic, with TTM FCF of $312M but Q2 2026 FCF of only $12M after $103M in capex, and Q4 2025 FCF was negative $150.6M. The heavy spending on sales and marketing ($395M, or 42.7% of revenue in Q2 2026) and R&D ($107M) is necessary to build Homes.com but leaves little margin for error if revenue growth stalls. Additionally, the company's return on equity is a negligible 0.084%, reflecting a massive capital base relative to earnings.
Market and competitive risks are also pronounced. The stock trades at a premium on sales (8.63x) and book (3.36x) relative to typical real estate services peers, though the forward PE of 15.4x is below the market average. The valuation is vulnerable to further compression if the earnings inflection fails to materialize. The residential real estate marketplace is highly competitive, dominated by Zillow and Realtor.com, and CoStar's late entry requires substantial ongoing investment. Regulatory risks are moderate, but any changes to data privacy or real estate listing rules could impact the business. The stock's beta of 0.747 indicates lower volatility than the market, but the negative relative strength (-82.38 over 1 year) shows company-specific issues are driving the decline, not macro factors.
The worst-case scenario involves a continued failure to achieve profitability in the residential segment, leading to sustained negative free cash flow, further analyst downgrades, and a breakdown below the 52-week low of $25.89. This could trigger momentum-driven selling and push the stock toward the analyst low target of $25.00, implying about 8.7% downside from the current price. In a more severe scenario, if commercial real estate weakness compounds the residential losses, the stock could retest its historical max drawdown of -70.16% from its peak, which would imply a price near $25.50 (based on the 52-week high of $85.24). From the current $27.38, a drop to $25.00 represents a loss of approximately 8.7%, but if the stock were to revisit its 52-week low of $25.89, the downside is about 5.4%. However, given the high uncertainty and wide analyst target range ($25-$53), a more bearish outcome could see the stock fall below $25 if the residential expansion is abandoned or significantly scaled back.
FAQ
The key risks include: 1) Financial risk: thin profitability and erratic free cash flow, with Q2 2026 FCF of only $12M and net margin of 5.95%; 2) Competitive risk: intense competition in residential real estate from Zillow and Realtor.com, requiring heavy ongoing investment; 3) Macro risk: a commercial real estate downturn could reduce demand for CoStar's core services; and 4) Company-specific risk: failure of Homes.com to achieve profitability could lead to write-downs and further stock declines. The most severe risk is a breakdown below the 52-week low of $25.89, which could trigger momentum selling and push the stock toward $20.
The 12-month forecast has three scenarios: Bull case (25% probability) targets $45-$53, assuming successful Homes.com integration and margin expansion; Base case (55% probability) targets $32-$40, assuming gradual improvement and stable growth; Bear case (20% probability) targets $20-$25, assuming continued losses and a breakdown below the 52-week low. The most likely scenario is the base case, with the stock trading around the consensus target of $37.30 as the company demonstrates progress on profitability. The key assumption is that revenue growth remains above 12% and operating margins stabilize in the 5-8% range.
CSGP appears undervalued on a price-to-sales basis, trading at 8.63x compared to historical levels of 55.4x in Q4 2023 and 31.2x in Q4 2025. However, on a forward PE basis, the stock trades at 15.4x, which is below the broader market but reflects the expectation of a significant earnings inflection. The trailing PE of 4,002x is meaningless due to near-zero earnings. The market is pricing in a successful turnaround, but the wide analyst target range ($25-$53) indicates high uncertainty. Relative to peers, the stock carries a premium on sales and book value, justified by its high gross margin and unique data assets, but the premium is contingent on executing the residential strategy.
From a risk/reward perspective, CSGP is a speculative buy for investors with a high risk tolerance and a long time horizon. The stock trades at $27.38, implying 36.2% upside to the consensus target of $37.30, and the forward PE of 15.4x is undemanding if earnings normalize. However, the company's net margin is only 5.95%, free cash flow is erratic, and the stock is in a severe downtrend, down 67% over the past year. The biggest downside risk is a break below the 52-week low of $25.89, which could lead to further losses. For value-oriented investors, the stock may be attractive at these levels, but for those seeking stability, it is not a good buy until there is clear evidence of a turnaround.
CSGP is more suitable for long-term investment (minimum 2-3 years) given the company's ongoing turnaround and the time needed for the residential expansion to pay off. The stock has a beta of 0.747, indicating lower volatility than the market, but it has experienced a severe drawdown and negative relative strength, making it risky for short-term trading. The lack of a dividend (payout ratio 0%) means returns depend entirely on capital appreciation. Earnings visibility is low due to the wide analyst target range and recent downgrades. Investors should be prepared for volatility and should only invest if they can tolerate a potential 20-30% further decline in the near term.