Shares of Redfin (RDFN) are on the rise on Monday after Stephens analyst John Campbell double upgraded the stock to Overweight, citing valuation and prospects for more e-commerce offerings in the real estate space. The analyst also added that many of the company’s top markets are in process of recovering from a tough in the second half of 2018.
BUY REDFIN: In a research note to investors, Stephens' Campbell double upgraded Redfin to Overweight from Underweight and raised his price target on the shares to $23 from $18 as he has come to "better appreciate" its market position/strategy and a handful of its newer offerings. The recent pullback in Redfin shares has brought a "very favorable" near-term setup as the company lays the groundwork for a more e-commerce type offering, Campbell contended. The analyst also noted that many of the company's top markets are in the process of recovering from a tough in the second half of 2018, and added that he sees improved operating results moving forward, starting with "impressive" second quarter results. Moreover, Campbell thinks Redfin has the type of model that can thrive in today’s real estate ecosystem or one that is dramatically altered.
While the analyst continues to see portions of the core business as being more "traditional" in nature, he has now a "found appreciation" for the website/top of the funnel offering and some of the newer offerings that were not present when he conducted his initial work on Redfin. The business is set up to cater to the consumer and not the agent, he added, arguing that consumers will win in the end.
WHAT'S NOTABLE: Meanwhile, Stephens' Campbell also downgraded Realogy Holdings (RLGY) to Equal Weight from Overweight and cut his price target on the shares to $8 from $16. The analyst told investors that he believes the company will sees a "depressed multiple" until it can prove the sustainability of its model, which he thinks will take at least a few quarters of consistent earnings growth. Further, Realogy's "hands are somewhat tied" given its debt position, which makes strategy development incrementally more challenging, the analyst contended.
PRICE ACTION: In morning trading, shares of Redfin have jumped almost 8% to $18.10.
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