On Wednesday, Citi updated its outlook on Doma Holdings Inc. (NYSE:DOMA), increasing the price target to $6.00 from the previous $5.00, while maintaining a Neutral rating on the company's shares. The adjustment reflects a more optimistic long-term view, despite a reduction in near-term earnings projections.
The financial institution highlighted the progress of Doma's strategic initiatives, notably the Upfront Title pilot program, which is currently in progress with key partners and could advance to a live phase in the second half of 2024. This development aligns with the Biden administration's recent efforts to reduce closing costs for homeowners.
Doma's fourth quarter financial results reported a net loss per share of $1.30, which matched Citi's forecast. The results showed a stronger revenue, although this was offset by higher fees paid to third-party agents. However, there was a silver lining as Doma's adjusted EBITDA, which excludes stock compensation, showed improvement, narrowing to a loss of $3 million.
Despite the positive aspects, Citi has revised its earnings per share (EPS) estimates for Doma for the years 2024 and 2025 downward to -$5.76 and -$4.40, respectively. The lowered projections are attributed to anticipated decreases in near-term gross profit margins.
The revised price target of $6 takes into account the potential for Doma's technology to gain traction, particularly following reports that Fannie Mae may utilize Doma's technology in a pilot program for specific refinancing transactions. This potential partnership could serve as an additional tailwind for the company's growth.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.