Analyst Curtis Nagle from Bank of America Securities reiterated a Sell rating on Redfin (RDFN – Research Report) and decreased the price target to $5.50 from $6.00.
Curtis Nagle has given his Sell rating due to a combination of factors surrounding Redfin’s current performance and future outlook. While the company’s first-quarter revenue and EBITDA of $225 million and negative $28 million surpassed Street expectations, Nagle is concerned with the soft second-quarter guidance provided by the company. Redfin’s revenue guidance is indeed above Street predictions, but the EBITDA forecast is significantly below, signaling potential difficulties ahead. Additionally, the recent uptick in interest rates is expected to slow down new listings, which could negatively impact volume growth. These elements contribute to Nagle’s skepticism regarding Redfin’s ability to sustain growth, especially in a challenging macroeconomic environment.
Moreover, Nagle remains cautious about the company’s long-term profitability prospects, given the volatile macro conditions that are likely to continue affecting the business into 2024. Despite modestly raising revenue estimates for 2024, he has lowered EBITDA expectations due to increased marketing and technology and development expenses. Nagle also points out that reductions in agent numbers and marketing expenditures could hinder Redfin’s competitiveness against larger brokerages in a market rebound. Persistent concerns about Redfin’s ability to generate positive margins and cash flow, coupled with the pressure of convertible and other debt, further justify the Underperform rating and the $5.50 price objective.
In another report released today, Piper Sandler also maintained a Sell rating on the stock with a $4.00 price target.
Based on the recent corporate insider activity of 46 insiders, corporate insider sentiment is positive on the stock. This means that over the past quarter there has been an increase of insiders buying their shares of RDFN in relation to earlier this year.
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Redfin (RDFN) Company Description:
Redfin Corp. provides real estate brokerage services. The firm engages in buying and selling homes. It operates through the following segments: Real Estate Services and Properties. The Real Estate Services segment consists of revenue transactions. The Properties segment consists of home purchase costs, capitalized improvements, selling expenses and home maintenance expenses. The company was founded by David Selinger, David Eraker, and Michael Dougherty in 2004 and is headquartered in Seattle, WA.
