On Wednesday, Real Brokerage Inc. (NASDAQ:REAX) was given a positive outlook by BTIG, as the firm started coverage on the company's stock with a Buy rating and a price target of $6.00. The firm believes that Real Brokerage, with its cloud-based real estate broker model, is well-positioned to perform strongly in a housing market that is either recovering or remaining stable.
The analyst from BTIG highlighted several key reasons for the optimistic stance on Real Brokerage. First, the expectation of falling mortgage rates could signal that the worst is over for existing home sales (EHS), which may return to growth. Even in the absence of this recovery, BTIG anticipates that Real Brokerage can still achieve significant growth.
Another point of interest is Real Brokerage's unique business model and attractive compensation structure, which have been successful in drawing agents and accelerating growth. This is despite the challenging conditions currently facing the market. For the year 2024, BTIG estimates a 78% increase in revenue for Real Brokerage.
Although the company operates on narrow margins due to high payouts to agents, it has been noted that Real Brokerage is EBITDA positive and generates significant free cash flow (FCF). Additionally, the firm does not carry any debt on its balance sheet. The high EBITDA multiple for Real Brokerage is deemed reasonable by BTIG, justified by the company's robust growth prospects, with a multiple-to-growth ratio of less than 1.0.
In conclusion, BTIG's initiation of coverage on Real Brokerage Inc. reflects a confident view of the company's ability to thrive and expand its market share in the real estate industry, regardless of market fluctuations. The Buy rating and $6.00 price target suggest a positive trajectory for the company's stock in the coming year.
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