Last Update 22 Feb 26

Fair value Decreased 3.32%

CSGP: New Buyback And Activist Pressure Will Support Homes Investment Payoff

Analysts have trimmed their price target on CoStar Group by about $2.70 to $78.05, reflecting a blend of reduced fair value, a lower assumed future P/E multiple, and ongoing debate around Homes.com, while also highlighting long-term revenue growth prospects and the potential impact of activism and capital returns.

Analyst Commentary

Recent research on CoStar Group shows a clear split between optimism around long-term growth and caution around execution, Homes.com investment, and valuation.

Bullish Takeaways

Bullish analysts see the recent pullback and ongoing debate around Homes.com as creating what they view as a more attractive entry point, even as some price targets move lower.
Several firms that are positive on the stock highlight CoStar's history of large investment cycles to build new businesses, and argue that the current spending on Homes.com could support future revenue growth.
Some bullish analysts point to management's 2026 to 2028 financial targets and the new US$1.5b share repurchase authorization as signals of confidence in the long-term outlook and capital return discipline.
JPMorgan notes that CoStar's CFO tends to be conservative and views the newly outlined revenue targets as encouraging. This supports more constructive views on execution against guidance.

Bearish Takeaways

Bearish analysts are focused on lower long-term targets and core profitability in the updated outlook, which they see as justifying lower P/E multiples and a reset in fair value assumptions.
Some cautious views center on Homes.com, where the projected reduction in net investment of more than US$300m in 2026 and over US$100m annually until 2030 still leaves questions about the timing and scale of any margin improvement.
Several neutral or negative takes flag slower than previously expected margin expansion, with guidance that implies commercial margins declining by 400 basis points as shared resources are diverted to newer growth areas.
Other cautious voices point out that 2028 EBITDA guidance of US$1.25b sits below prior market expectations. They see this as a headwind for rerating until CoStar shows clearer progress on both growth and profitability targets.

What’s in the News

D.E. Shaw is pushing for changes to CoStar’s board, arguing in an open letter that spending at Homes.com and broader capital allocation need tighter oversight, and signaling plans to support new director candidates at the 2026 annual meeting (WSJ, company communication).
Third Point, led by Dan Loeb, has launched a public campaign criticizing CoStar’s governance, executive pay, acquisition approach, and residential strategy, and is preparing a slate of directors while calling for Homes.com and related residential businesses to be divested or shut down (Reuters, company communication).
CoStar amended its Executive Severance Plan on February 13, 2026, removing the “director clause” from the definition of “Change in Control” after a Delaware lawsuit tied to threatened proxy contests from Third Point and D.E. Shaw, with the board citing a desire to avoid additional cost and distraction (company filing).
The company authorized a new share repurchase program of up to US$1.5b, funded from its businesses, with no stated time limit, and reported completing US$500 million of buybacks covering 6,844,928 shares under a prior authorization through December 31, 2025 (company announcement).
CoStar launched Homes AI on Homes.com, using Microsoft Azure OpenAI and the platform’s internal data to let users search and refine home listings through conversational voice or text, with plans to roll the capability out across other brands such as Apartments.com, CoStar, LoopNet, Land.com, and BizBuySell (company announcement).

Valuation Changes

Fair Value: Trimmed from $80.74 to $78.05, a reduction of about 3.3% that aligns the model more closely with the latest analyst target.
Discount Rate: Adjusted slightly lower from 8.65% to 8.61%, a modest shift that has a limited effect on the overall valuation output.
Revenue Growth: Assumed long-term revenue growth rate nudged up from 15.36% to 15.49%, representing a small change in the expected top-line trajectory.
Net Profit Margin: Tweaked down from 12.30% to 12.21%, indicating slightly lower modeled profitability on future dollar revenue.
Future P/E: Reduced from 83.78x to 74.59x, a meaningful reset in the assumed multiple that is a key driver of the lower dollar fair value estimate.

Robust user growth, tech innovation, and regulatory trends are strengthening CoStar's role as an industry standard, supporting sustainable pricing and expanding profit margins.
Major investments in residential real estate, international expansion, and advanced analytics are unlocking new revenue streams and accelerating long-term growth opportunities.
Aggressive investments, competitive pressures, and market uncertainties could increase expenses, compress profitability, and drive revenue volatility across key CoStar business segments.

Catalysts

About CoStar Group

Provides information, analytics, and online marketplace services in the United States, Canada, Europe, the Asia Pacific, and Latin America.What are the underlying business or industry changes driving this perspective?

Continued digitalization and demand for high-quality, data-driven real estate platforms are driving significant user growth, engagement, and record net new bookings across CoStar's core and expansion businesses, supporting ongoing double-digit revenue growth and higher recurring earnings.
Market and regulatory trends continue to increase the need for transparency, fee disclosure, and real-time data, solidifying CoStar's role as a trusted industry standard and enabling sustainable pricing power, which should help further margin expansion.
Aggressive investment in the Homes.com platform and rapid sales force expansion are enabling accelerated penetration in residential real estate, opening up a vast addressable market and creating meaningful opportunities for top-line growth and revenue diversification.
Integration of AI-driven features, Matterport's 3D technology, and advanced analytics across platforms is increasing user engagement, enabling higher-value product offerings and upsells, and improving client retention-positioning the company for elevated margins and increased net income over time.
CoStar's international expansion-through acquisitions (Domain in Australia), pan-European offerings, and market share gains-broadens its addressable market and underpins sustained long-term revenue growth and earnings scalability.

CoStar Group Earnings and Revenue Growth

CoStar Group Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming CoStar Group's revenue will grow by 16.9% annually over the next 3 years.
Analysts assume that profit margins will increase from 3.6% today to 18.6% in 3 years time.
Analysts expect earnings to reach $866.2 million (and earnings per share of $1.49) by about September 2028, up from $104.2 million today.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 66.7x on those 2028 earnings, down from 358.4x today. This future PE is greater than the current PE for the US Real Estate industry at 25.8x.
Analysts expect the number of shares outstanding to grow by 3.34% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 8.4%, as per the Simply Wall St company report.

CoStar Group Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

The rapid expansion of Homes.com's sales force and aggressive investments in marketing and headcount carry a risk of increased operating expenses outpacing revenue growth if the residential business fails to achieve anticipated adoption and margin improvement, potentially compressing net margins and profitability over time.
Matterport, while integrated into CoStar, is not profitable and its growth rate has slowed; if the B2B pivot, increased investment, and planned global salesforce expansion do not yield expected results, this could be a continued drag on consolidated earnings and limit EBITDA growth.
Competitive threats, particularly from Zillow's aggressive tactics, ongoing lawsuits, antitrust scrutiny, and pricing actions, may increase customer acquisition costs or pressure pricing at Apartments.com, Homes.com, and other segments, creating potential headwinds for revenue and earnings if market share gains are challenged.
The office segment of commercial real estate remains weak due to high vacancies and negative absorption, and while there has been an uptick in transaction volumes, a persistent shift towards remote/hybrid work or a macroeconomic downturn could structurally shrink the CRE market CoStar relies on, negatively impacting long-term revenue growth.
A continued reliance on subscription models and large-scale annual contracts exposes CoStar to risk of elevated churn or lower renewal rates should major economic swings, increased competition, or changes in technology commoditize their data offerings, resulting in revenue volatility and potential earnings disruptions.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $97.125 for CoStar Group based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $107.0, and the most bearish reporting a price target of just $70.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $4.7 billion, earnings will come to $866.2 million, and it would be trading on a PE ratio of 66.7x, assuming you use a discount rate of 8.4%.
Given the current share price of $88.14, the analyst price target of $97.12 is 9.3% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

Margin Expansion And Platform Momentum Will Drive Strong Returns Ahead