Digital real estate broker Redfin Corp. lost its last remaining Wall Street bull Wednesday.
(Bloomberg) — Digital real estate broker Redfin Corp. lost its last remaining Wall Street bull Wednesday.
Truist Securities analyst Naved Khan downgraded the company to hold from buy on growth fears. Khan’s cut marks the first time since the company’s initial public offering in 2017 that the stock has no buy-equivalent ratings from analysts, according to data compiled by Bloomberg. Khan slashed the stock’s price target to $5.50 from $10.
Khan notes that the stock has bounced off its lows in early November, but it still remains down 87% for the year. The shares were up 3.3% as of 10:49 a.m. in New York on Wednesday amid a broader stock-market rally.
“With this move up, we believe the stock has shaken off the concerns around liquidity that we had believed were unwarranted,” Khan wrote. But the analyst sees near-term catalysts as “lacking,” given that its “business would still have to endure headwinds from housing slowdown, particularly in 1H23.”
Existing US home sales fell for the 10th-straight month in November, extending a record decline as rising mortgage interest rates stymie activity.
Read more: US Housing Enters Deep Freeze With Sellers and Buyers Sidelined
“While Redfin has taken numerous steps (e.g. headcount reduction, elimination of homebuyer refund) to improve profitability in 2023 amid macro headwinds, we note that adverse changes in operating environment (e.g. rates, demand) could still weigh on execution against these targets,” Khan wrote.
Redfin did not immediately respond to a request for comment.
While no analysts have buy-equivalent ratings on the stock, more than a dozen have hold-level recommendations and a handful say sell, according to data compiled by Bloomberg.
Khan also downgraded Redfin peer Opendoor Technologies Inc. to hold from buy, noting the “drag from remnant inventory, faster than expected correction in home values due to high mortgage rates and reduced demand create incremental risks for 1H23 performance.”
–With assistance from Bre Bradham and Matt Turner.
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