On Friday, Keefe, Bruyette & Woods adjusted its price target for Opendoor (NASDAQ:OPEN) Technologies (NASDAQ: OPEN), reducing it to $2.45 from the previous $3.00, while keeping a Market Perform rating on the stock. The firm's assessment followed Opendoor's recent quarterly financial report, which showed revenue and adjusted EBITDA surpassing both Keefe, Bruyette & Woods' and the consensus estimates. Despite these beats, the company's home purchases for the first quarter fell short of expectations.
Opendoor's first-quarter performance included revenue and AEBITDA that were 9% and 8% higher than Keefe, Bruyette & Woods' forecasts, respectively, and 30% and 31% above consensus estimates. The analyst from Keefe, Bruyette & Woods noted that these results were anticipated based on third-party data. Nonetheless, the number of home purchases by Opendoor in the first quarter was 7% lower than both Keefe, Bruyette & Woods' and consensus projections.
The company's outlook presented mixed signals, with the midpoint for adjusted EBITDA surpassing Wall Street expectations, but the revenue midpoint was 2.5% below. The analyst expressed concerns about the guidance for second and third quarter purchase volumes, which do not indicate a significant increase throughout the year, describing the forecast as somewhat disappointing.
According to Keefe, Bruyette & Woods, the primary factor influencing Opendoor's stock will likely be its purchase volumes, which are currently 30% below the levels needed to break even. In response to the latest results and outlook, the firm has raised its earnings per share (EPS) and EBITDA estimates for 2024 but lowered them for 2025. Consequently, the price target has been adjusted downward to $2.45, with the Market Perform rating remaining unchanged.
InvestingPro Insights
As investors digest the latest analysis from Keefe, Bruyette & Woods on Opendoor Technologies (NASDAQ: OPEN), it's important to consider additional metrics and insights that may impact the investment decision. According to InvestingPro data, Opendoor currently holds a market capitalization of $1.63 billion. The company's revenue for the last twelve months as of Q1 2024 stands at $5.007 billion, which represents a significant decline of 63.01% year-over-year. This aligns with the analysts' concerns about potential sales decline in the current year, as noted in one of the InvestingPro Tips.
The company's price-to-earnings (P/E) ratio is in negative territory at -5.54, reflecting challenges in profitability, with analysts not expecting the company to be profitable this year. The negative P/E ratio is further underscored by a gross profit margin of only 8.61% for the same period, indicating struggles with maintaining profitability, which is also highlighted by another InvestingPro Tip pointing out weak gross profit margins.
Despite a challenging performance over the past months, with a 29.27% decline in the stock price over the last month and a 42% drop over the last three months, Opendoor's liquid assets exceed its short-term obligations, providing some financial stability. This may offer a glimmer of hope for investors looking for signs of resilience in the company's balance sheet.
For those seeking a deeper analysis, InvestingPro offers additional insights and metrics that could prove invaluable. There are 13 more InvestingPro Tips available for Opendoor Technologies, which can be accessed at https://www.investing.com/pro/OPEN. To enhance your investment strategy, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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