The housing market has surged in the past two years. On average, home prices have risen 20% year over year most months, according to the S&P Case-Shiller real estate report. This has ultimately created an opportunity for real estate firms to profit big, according to one investment house.
Wedbush has issued a few calls with a focus on real estate firms. Jay McCanless was the lead analyst on the call for the boutique brokerage firm. A majority of these calls were incredibly positive forecasting solid upside for these real estate firms.
It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
Zillow Group
Zillow Group, Inc. (NASDAQ: ZG): Wedbush upgraded to an Outperform rating from Neutral and raised the price target to $41 from $37, implying upside of 17% from the most recent closing price of $35.12. McCanless noted in the report that the close out of the Homes division leaves Zillow in an “interesting” position with a net cash balance sheet and many opportunities. He ultimately believes Zillow has the time and the cash to get the Super App right while potentially taking market share from weaker hands in the core IMT business, and thinks Zillow will be a consistent share repurchaser over the next six quarters.
The stock traded at around $34 on Thursday, in a 52-week range of $28.76 to $118.31. Shares are down over 46% year to date.
Redfin
Redfin Corp. (NASDAQ: RDFN): McCanless downgraded to a Neutral rating from Outperform and cut the price target to $9 from $14, implying downside of 5% from the most recent closing price of $9.50. Increased data disclosure promised for fiscal Q2 may provide more clarity about segments, but “enhanced disclosure cannot change the fact that Redfin consistently lost money during one of the best sales/demand/pricing environments we have ever seen for housing during 2021,” McCanless detailed in the report. He also calls the company’s entry into mortgage “a poorly timed decision in hindsight.”
Redfin stock has a 52-week trading range of $7.13 to $63.64, and it traded near $8 a share on Thursday. The stock is down 78% year to date.
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Offerpad Solutions
Offerpad Solutions Inc. (NYSE: OPAD): Wedbush initiated coverage with an Outperform rating and a $5 price target, implying upside of 105% from the most recent closing price of $2.44. McCanless pointed out that since coming public last year, the backdrop for Offerpad has shifted from the lowest mortgage rates in decades and an accommodative Federal Reserve to the highest mortgage rates in over a decade and a tightening Fed.
The stock traded around $2 Thursday, in a 52-week range of $2.11 to $20.97. Shares are down over 64% year to date.
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