What Happened?
Shares of real estate data provider CoStar Group (NASDAQ: CSGP) fell 18.2% in the afternoon session after the company reported third-quarter results and provided a mixed forecast for the upcoming quarter. Revenue grew a robust 20.4% year-over-year to $833.6 million, and adjusted earnings per share of $0.23 also surpassed Wall Street's expectations. However, investors focused on the company's outlook. While CoStar's fourth-quarter revenue guidance was strong and ahead of estimates, its adjusted earnings per share forecast of $0.27 came in below the analyst consensus of $0.30. Adding to concerns, the company's operating margin fell to negative 6.1% from positive 3.4% a year ago, signaling that expenses are growing faster than sales. The sharp stock decline suggests the market is prioritizing future profitability over current revenue growth.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy CoStar? Access our full analysis report here.
What Is The Market Telling Us
CoStar’s shares are not very volatile and have only had 6 moves greater than 5% over the last year. Moves this big are rare for CoStar and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 3 months ago when the stock gained 6.6% on the news that the company reported strong second-quarter results that beat estimates and raised its full-year guidance. The company posted second-quarter revenue of $781.3 million, a 15% year-over-year increase that surpassed analyst expectations. While net income declined, investors focused on record net new bookings, which hit $93 million, signaling strong future demand. This was a 65% increase from the prior quarter and was driven by broad-based strength, including the best bookings quarter for Apartments.com in two years. CoStar also raised its full-year revenue forecast to between $3.135 billion and $3.155 billion and increased its adjusted EBITDA guidance. The positive results prompted several Wall Street analysts to raise their price targets on the stock. For instance, Goldman Sachs reiterated its Buy rating and $105 price target, while JPMorgan lifted its target to $101, citing the favorable growth outlook. The stock hit a new 52-week high during the session.
CoStar is down 1.5% since the beginning of the year, and at $69.80 per share, it is trading 27.9% below its 52-week high of $96.83 from August 2025. Investors who bought $1,000 worth of CoStar’s shares 5 years ago would now be looking at an investment worth $842.73.
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