On Thursday, Evercore ISI updated its outlook on CBRE Group (NYSE:CBRE) shares, increasing the price target to $147 from $132 while sustaining an Outperform rating. This adjustment follows CBRE Group's announcement of robust third-quarter earnings and the positive impact of its recent cost-saving measures.
The firm has also enhanced its full-year 2024 core earnings per share (EPS) guidance by 4%, which comes after an 8% increase subsequent to the second-quarter results.
CBRE Group now anticipates a midpoint core EPS of $5.00 for the year, up from the previous forecast of $4.80. In response, Evercore ISI has revised its core EPS estimates for fiscal years 2024 and 2025 upwards by 4.4% and 1.8%, respectively, setting them at $4.97 and $6.10. This revision leaves room for potential further increases in the estimates as the year-end approaches.
The analyst at Evercore ISI highlighted that CBRE's cyclical businesses are gaining momentum as the company moves into 2025. The revision in the price target reflects the improved earnings trends observed.
Moreover, the company's financial health was noted, with an expectation of approximately 1x net debt to EBITDA by the end of 2024. This positions CBRE Group favorably for potential mergers and acquisitions, as well as share buybacks.
The primary uncertainty mentioned concerns the rate of recovery in sales, which is influenced by the ongoing volatility in the bond market. Despite this, the updated price target and maintained Outperform rating indicate confidence in CBRE Group's performance and strategic initiatives.
In other recent news, CBRE Group reported a strong Q3 performance, with adjusted earnings of $1.20 per share, exceeding analyst estimates of $1.06. The company's revenue also surpassed expectations, rising 14.8% year-over-year to $9.04 billion.
This robust performance was attributed to double-digit growth across all business segments, with global leasing revenue surging 19% and property sales revenue increasing for the first time in eight quarters.
In addition to its strong earnings and revenue, CBRE also generated $494 million in free cash flow during the quarter, marking a 61% increase from the same period last year. The company's net leverage ratio ended at 1.26x, comfortably below its primary debt covenant of 4.25x.
These are recent developments for CBRE, which has also revised its full-year adjusted earnings guidance to a range of $4.95 to $5.05 per share, up from its previous outlook of $4.70 to $4.90. This revised guidance surpasses the consensus estimate of $4.82. CBRE's CEO, Bob Sulentic, noted that the third quarter was highlighted by the second-highest third quarter core earnings per share in the company's history.
InvestingPro Insights
CBRE Group's strong performance and positive outlook are further supported by recent data from InvestingPro. The company's market capitalization stands at an impressive $40.52 billion, reflecting its significant presence in the Real Estate Management & Development industry. CBRE's revenue growth of 7.42% over the last twelve months as of Q2 2024 aligns with the analyst's optimistic view on the company's cyclical businesses gaining momentum.
InvestingPro Tips highlight that CBRE has been aggressively buying back shares, which complements the analyst's mention of potential share buybacks. Additionally, the company's strong return over the last year, with a 1-year price total return of 84.23%, underscores its robust performance.
It is worth noting that CBRE is trading near its 52-week high, with its current price at 99.26% of the 52-week high. This aligns with Evercore ISI's increased price target and maintained Outperform rating.
For investors seeking more comprehensive insights, InvestingPro offers 18 additional tips for CBRE, providing a deeper understanding of the company's financial health and market position.
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