CoStar Group (CSGP): Evaluating Valuation as Investors Weigh Recent Share Price Trends

CoStar Group (CSGP) has experienced modest movement in its stock price over the past week, drawing attention from investors interested in the company's longer-term growth trajectory. Recent activity highlights a steady performance in the context of a changing real estate landscape.

See our latest analysis for CoStar Group.

This week’s share price action is just one chapter in CoStar Group’s ongoing story. After a strong start to the year, momentum has cooled in recent months, with a 1-year total shareholder return of 5.1%. That signals some growth, but also hints that investors are adapting their expectations as market conditions shift.

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With current returns lagging behind analyst price targets and a mix of strong revenue growth, the big question is whether CoStar shares are actually undervalued or if the market has already factored in all potential upside.

Most Popular Narrative: 20% Undervalued

With a narrative fair value of $97.13 versus a last close of $77.66, the market price signals a divergence with consensus expectations. This sets the stage for a deeper look into the assumptions fueling optimism for CoStar Group's future growth.

Continued digitalization and demand for high-quality, data-driven real estate platforms are driving significant user growth, engagement, and record net new bookings across CoStar's core and expansion businesses, supporting ongoing double-digit revenue growth and higher recurring earnings. Market and regulatory trends continue to increase the need for transparency, fee disclosure, and real-time data, solidifying CoStar's role as a trusted industry standard and enabling sustainable pricing power. This should help further margin expansion.

Read the complete narrative.

Want to peek behind the curtain of this bullish price target? It all hinges on aggressive growth forecasts, profit margin leaps, and bold revenue assumptions. Find out what makes this narrative such a standout among analysts. Don't miss the surprising details driving its valuation call.

Result: Fair Value of $97.13 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, intense competition in residential platforms or rising operating expenses could derail these bullish forecasts and put pressure on CoStar’s future profitability.

Find out about the key risks to this CoStar Group narrative.

Another View: The Multiples Perspective

Looking at CoStar from a different angle, the price-to-sales ratio stands at 11.3x. That is well above both the industry average of 2.6x and the peer group average of 2.7x. The fair ratio is 5.3x, so the current premium raises questions about valuation risk if sentiment changes.

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own CoStar Group Narrative

If you prefer a hands-on approach or see the story differently, dive into the numbers and build your own narrative in just a few minutes. Do it your way

A great starting point for your CoStar Group research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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