CoStar Group (CSGP) Is Down 10.3% After Profit Squeeze and Lawsuit Reveal Strategic Trade-Offs

• In its latest quarterly update, CoStar Group, Inc. reported third-quarter 2025 revenue of US$833.6 million, up from US$692.6 million a year earlier, but also posted a net loss of US$30.9 million compared to net income of US$53 million the previous year.
• The company simultaneously faced increased legal risks, with a lawsuit over MLS data access, and completed a significant share buyback for 1,401,375 shares totaling US$114.78 million under a program announced earlier in 2025.
• With profitability under pressure amid legal disputes and ongoing investment in residential platforms, we'll assess the implications for CoStar's investment narrative.

Find companies with promising cash flow potential yet trading below their fair value.

CoStar Group Investment Narrative Recap

CoStar Group’s investment story relies on faith in the company’s ability to sustain rapid digital platform growth and eventually restore margin expansion, particularly through adoption of its Homes.com residential offering. The latest quarterly news brings this challenge into focus: while top-line momentum remains strong and Q4 revenue guidance is solid, persistent net losses and accelerated expenses directly test whether growth can keep ahead of margin risks in the near term, especially as legal battles over MLS data create further cost and operational uncertainty. Looking at recent announcements, the company’s updated full-year 2025 revenue forecast, calling for 18% growth year-over-year to a range of US$3.23 billion to US$3.24 billion, offers reassurance that topline catalysts remain intact even as profitability is pressured. This projection is now a crucial reference point for evaluating how effective CoStar's strategy will be in balancing aggressive investment, legal costs, and commercial execution in an increasingly tough market for real estate data services. Yet, in contrast to revenue growth, mounting legal risks tied to MLS data litigation could have broader impacts for investors beyond near-term earnings...

Read the full narrative on CoStar Group (it's free!)

CoStar Group's narrative projects $4.7 billion in revenue and $866.2 million in earnings by 2028. This requires 16.9% yearly revenue growth and a $762 million increase in earnings from $104.2 million today.

Uncover how CoStar Group's forecasts yield a $94.06 fair value, a 35% upside to its current price.

Exploring Other Perspectives

Simply Wall St Community members have posted fair value estimates for CoStar Group ranging from US$52.39 to US$139.70, across three distinct analyses. While many focus on residential platform growth as a key catalyst for future returns, opinions diverge widely on earnings risk and valuation, inviting you to consider multiple angles on the company’s outlook.

Explore 3 other fair value estimates on CoStar Group - why the stock might be worth 25% less than the current price!

Build Your Own CoStar Group Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• 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.
• Our free CoStar Group research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate CoStar Group's overall financial health at a glance.

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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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