Redfin Is Upbeat About This Year. So Is Wall Street.

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Redfin

has reported a smaller-than-feared earnings loss. Analysts responded by raising their stock price targets.

The brokerage and real estate listings company (ticker: RDFN) on Feb. 16 said it lost 57 cents per share on revenue of roughly $480 million in the fourth quarter. The results were better than what Wall Street expected: a $1.07 loss per share on sales of about $445 million, according to

FactSet
.

The company also beat full-year per-share expectations, which called for a loss of $3.48 per share on sales of $2.25 billion.

Redfin

said it lost $2.99 per share in 2022 on revenue of $2.28 billion. 

Redfin

‘s earnings tracks change at the company, which, like

Zillow Group

(Z), took steps to end its program buying and selling homes in 2022. Redfin in November announced its intention to end RedfinNow, the program through which it bought and sold homes. Redfin is on pace to sell its remaining inventory of homes in the second quarter, with 19 homes yet to be sold, Redfin CEO Glenn Kelman said on an earnings call. 

 “As we compete better for online real estate traffic and improved sales execution, we expect share gains to accelerate in the second half, especially when we’re no longer comparing our sales to a period of aggressive spending on agent hiring and home purchases,” Kelman said.

The CEO also offered an optimistic outlook: the expectation of adjusted Ebitda profit in full-year 2023. The company had an adjusted Ebitda loss of roughly $192 million in fiscal 2022. “We shifted to more digital-margin revenue, lowered expenses, increased our share of online real estate traffic, and improved the quality of our sales force,” the CEO said in a statement. “The discipline to make adjusted Ebitda this year can make us very profitable when the housing market recovers.” 

The company said it expects total revenue between $307 million and $324 million in the first quarter, more than the $295 million estimated by FactSet. Redfin said it expects a total net loss between $116 million and $105 million, and an adjusted Ebitda loss between $84 million and $73 million, both greater first-quarter losses than estimates. 

Several analysts raised their price targets on the shares on Friday. “Assuming demand inflects positively during 2023, we anticipate Redfin should be near the goal of AEBITDA profitable by FYE23,” Wedbush analysts Jay McCanless and Brian Violino wrote in a report. The team doubled their price target on the shares, to $8 from $4, but maintained a Neutral rating. “We are staying sidelined on the name for now,” the analysts wrote, citing the impact of February’s higher mortgage rates. 

RBC analysts Brad Erickson and Logan Reich also doubled their price target on the shares, to $10 from $5, and maintained their Sector Perform rating. “We’ve no doubt the company can return to growth alongside the real estate market eventually & management’s clearly committed to bottom-line execution,” they wrote. “However, we need more confidence in share gains […] before we can get more constructive from current levels.”

The stock declined 6.5% to $8.42 at Friday’s close. Shares have had a wild ride that began with the Covid-19 pandemic. The stock closed at $23.70 on March 10, 2020, the day before the World Health Organization declared Covid-19 a pandemic. 

Since then, investor sentiment toward Redfin shares has shifted with the broader real estate market, with the stock rising as high as $98.40 as home sales soared in early 2021. As rising mortgage rates dampened housing demand in 2022, the company’s shares fell, finishing 2022 at $4.24. As mortgage rates dropped in early 2023, Redfin shares once again picked up—they are up 98.6% so far this year.

Write to Shaina Mishkin at [email protected]