AnalystConsensusTarget updated the narrative for HOUS

Analysts have increased their fair value estimate for Anywhere Real Estate from $7.75 to $8.50 per share. They cite the pending Compass acquisition, updated transaction details, and improved industry outlook as key factors behind the revision.

Analyst Commentary

Recent Street research indicates a shift in sentiment among analysts following the announced acquisition of Anywhere Real Estate by Compass. Several upgrades were issued, with most focusing on the strategic rationale and anticipated synergies from the deal, as well as acknowledging potential challenges ahead.

Bullish Takeaways

• Bullish analysts highlight the potential for the combined company to become an industry leader, controlling approximately 15% of national transaction sides and supporting over 320,000 agents.
• Cost synergies are expected to be significant, with an estimated $225 million in operational expense reductions and an improvement in overall profitability.
• Forecasts for growth are based on a projected 2025 pro forma revenue of $12.8 billion. There is also an expectation that net debt-to-EBITDA may fall from 4.4x to about 1.5x by 2028.
• Upwardly revised price targets, in some cases more than tripling prior estimates, suggest a positive reaction to both the improved industry outlook and the details of the Compass transaction.

Bearish Takeaways

• Bearish analysts note antitrust scrutiny as a key risk and state that the deal faces potential regulatory hurdles that could impact or delay the transaction.
• The companies are expected to be highly leveraged at closing, reflecting a debt-heavy balance sheet that will require effective execution of planned deleveraging.
• Concerns persist around execution risk, as achieving and sustaining the anticipated cost synergies and integration benefits will be complex and could weigh on near-term financial performance.
• Some analysts take a more neutral stance and believe the deal offers fair value for shareholders. However, they caution that upside may be limited by industry competition and macroeconomic headwinds.

What's in the News

• FINRA is investigating trading activity related to a failed Douglas Elliman acquisition bid by Anywhere Real Estate in May. The focus is on determining who had advance knowledge of the offer before it was made public (Reuters).
• Compass entered into a definitive agreement to acquire Anywhere Real Estate in a $1.7 billion transaction. Completion is expected in the second half of 2026, pending shareholder and regulatory approval.
• Following the merger, shareholders of Compass will own about 78% and Anywhere shareholders about 22% of the combined company. The new company will be led by Compass CEO Robert Reffkin.
• Anywhere Real Estate announced a strategic partnership with Canva, providing complimentary access to Canva Enterprise for agents across all affiliated brokerages.
• The company recently completed the repurchase of over 8.7 million shares for nearly $97 million under its ongoing buyback program.

Valuation Changes

• The Fair Value Estimate has increased from $7.75 to $8.50 per share, reflecting a moderate upward revision.
• The Discount Rate remains unchanged at 12.32%, indicating no shift in risk assumptions.
• The Revenue Growth projection is nearly flat, holding steady at approximately 7% year over year.
• The Net Profit Margin has decreased notably, moving from 1.37% to 0.96%.
• The Future P/E Ratio has risen significantly, from 12.93x to 20.20x, suggesting higher valuation expectations for future earnings.