On Monday, Redfin Corp. (NASDAQ:RDFN) experienced a revision in its stock outlook by a B.Riley analyst, who adjusted the stock price target on the company to $7.00, a decrease from the previous $8.00, while maintaining a Neutral rating. The adjustment reflects the analyst's updated model based on Redfin's fourth quarter 2023 results, their future outlook, and management commentary.
The analyst noted that sales activity in the housing market remains challenged due to persistently high-interest rates. However, the planned expansion of "Redfin Next" into more markets is seen as a strategic move. This initiative is expected to help the company shift from a higher fixed cost structure to one with greater variable costs and attract top talent in the industry.
In addition, Redfin's renewed focus on touring and the reintroduction of sales commission refunds are anticipated to drive volume growth by improving conversion rates, which could result in market share gains. The analyst also expressed optimism about the increased attach rate for mortgage originations, forecasting robust growth for this segment as transaction volumes rebound.
Despite the positive outlook on these initiatives and their potential impact over the medium to long term, management's expectations have shifted. The company now aims to achieve positive EBITDA on a trailing twelve-month basis by the end of 2024, rather than in the first half of the year as previously anticipated.
The analyst concluded that at the current stock levels, the risk-reward profile for Redfin is balanced, which supports the decision to maintain a Neutral rating. The stock price target has been adjusted to $7 to align with these updated projections and market conditions.
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