Tuesday, Scotiabank updated its outlook on Colliers International (NASDAQ:CIGI) shares, increasing the price target to $150 from $135 while maintaining a Sector Outperform rating. The adjustment reflects a positive stance on the company's performance amidst a broader market anticipation of interest rate cuts.
Colliers International's stock has experienced a significant upswing, rising 23% in July, outperforming the S&P/TSX Composite Index, which saw a 3.7% increase. This surge aligns with the upward trend seen in the real estate brokerage sector, where peers CBRE and JLL have also enjoyed 15-18% gains due to the same expectations. Similarly, alternative asset managers and the Canadian REIT sector have risen by 11% and 7.4%, respectively, during the same period.
The bank's analyst suggests that the recent price movement may lead to some volatility around the release of Colliers' second-quarter results, particularly as the company provides updates to its 2024 guidance. According to the analyst's model, Colliers is projected to hit the mid-point of its full-year 2024 revenue and EBITDA guidance.
Despite this, the forecast for 2024 earnings per share (EPS) is anticipated to be at the lower end of the company's guidance range. The analyst predicts a year-over-year growth of approximately 10%, which is at the conservative end of Colliers' provided range of 10-20%. Looking ahead to 2025, the analyst expects an even stronger performance from Colliers, with an estimated 18.8% year-over-year growth in EPS.
Scotiabank's revised price target of $150 represents a $15 increase from the previous target, signifying confidence in Colliers International's future financial performance.
In other recent news, Colliers International demonstrated solid growth in its first quarter, with notable improvements in revenue and EBITDA. The company's diversified services and focus on high-value, recurring lines have poised it for continued growth.
Colliers added $300 million in new equity and expanded its presence in the Mid-Atlantic through the acquisition of Colliers Philadelphia. The company also reported a strong performance in the Asia Pacific region and anticipates sustained revenue growth across its major business segments.
Colliers International maintains a robust acquisition pipeline and expects transaction velocity to improve in the latter half of the year. The company's financial leverage ratio stands at 2 times, with a projection to reduce to 1.5 times by year-end.
Despite ongoing interest rate and geopolitical uncertainties, the company remains optimistic about its future growth, driven by its diversified professional services platform.
These recent developments highlight Colliers International's resilience and adaptability in a fluctuating market. The company continues to navigate the challenges of the current economic landscape while laying the groundwork for future success.
InvestingPro Insights
As Colliers International (NASDAQ:CIGI) garners a positive outlook from Scotiabank with an updated price target of $150, investors might find additional insights from InvestingPro valuable. Colliers is currently trading at a high P/E ratio of 62.63, which is slightly down when adjusted for the last twelve months as of Q1 2024 to 60.8, indicating a premium on earnings. An InvestingPro Tip suggests that despite this high earnings multiple, the stock is trading at a low P/E ratio relative to near-term earnings growth. This could signal an attractive entry point for investors believing in the company's growth potential.
Another InvestingPro Tip points to the RSI indicating that the stock is in overbought territory, which might lead to some caution among traders. Nonetheless, Colliers has demonstrated strong returns, with a 22.74% increase over the past year, aligning with the bullish sentiment reflected in Scotiabank's report. Furthermore, the company's liquid assets exceed short-term obligations, providing financial stability.
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