Third Point Pushes for CoStar Board Restructuring
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Jan 27 2026
0mins
Should l Buy CSGP?
Source: seekingalpha
CoStar Group Inc's stock rose by 5.12% as it reached a 20-day high.
Activist hedge fund Third Point has announced plans to nominate new directors to restructure CoStar's board, aiming to enhance corporate governance and restore shareholder trust. They want CoStar to focus on its commercial business while shutting down or selling its residential operations to address past strategic blunders and uncontrolled spending. This restructuring is seen as crucial for navigating the current critical inflection point and preventing further value destruction.
The push for board restructuring by Third Point could lead to significant changes in CoStar's strategic direction, potentially improving investor confidence and company value.
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Analyst Views on CSGP
Wall Street analysts forecast CSGP stock price to rise
13 Analyst Rating
8 Buy
4 Hold
1 Sell
Moderate Buy
Current: 48.940
Low
48.00
Averages
74.92
High
101.00
Current: 48.940
Low
48.00
Averages
74.92
High
101.00
About CSGP
CoStar Group, Inc. is a provider of online real estate marketplaces, information, and analytics in the property markets. It manages its business in two segments: North America, which includes the United States and Canada, and International, which primarily includes Europe, Asia-Pacific and Latin America. Its major brands include CoStar, a global provider of commercial real estate data, analytics, and news; LoopNet, a commercial real estate marketplace; Apartments.com, a platform for apartment rentals; and Homes.com, a residential real estate marketplace. Its other brands include STR, which is engaged in hospitality data and benchmarking, Ten-X, an online platform for commercial real estate auctions and negotiated bids and OnTheMarket, a residential property portal in the United Kingdom. The Company, through Matterport, Inc., is advancing property insights and driving the growth of AI-driven digital twin technology across the global commercial and residential real estate sector.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
CoStar Group Faces Investment Challenges and Stock Price Pressure
- Data Platform Advantage: CoStar's commercial data platform, built on nearly four decades of data collection and a 93% renewal rate, creates a deep lock-in effect that is difficult to replicate; despite its stock price being nearly halved in the past six months, its commercial core remains robust.
- Residential Investment Dilemma: CoStar invested $850 million into Homes.com in 2025, resulting in a net operating loss, and although management plans to cut over $300 million in investment, breakeven for this segment is not expected until 2030.
- Margin Improvement: The information and marketplace segment achieved a 47% profit margin in Q3 2025, up 400 basis points year-over-year, driven by a 23% increase in CRE transaction volume, showcasing the strength of its core business.
- Stock Buyback Plan: CoStar's board authorized a $1.5 billion stock buyback and holds $942 million in net cash, with the stock currently trading at about 23 times the 2026 EBITDA forecast, indicating relative attractiveness.
See More
CoStar Group Stock Experiences Significant Volatility
- Stock Decline: CoStar Group's stock has nearly halved over the past six months, currently priced at $48.97 with a market cap of $21 billion, reflecting investor concerns over its residential business despite the stability of its commercial core.
- Data Network Effects: CoStar has established a robust data network by connecting 8.5 million properties with over 230,000 professionals, facilitating deal closures and demonstrating its competitive edge in the commercial real estate sector.
- High Renewal Rates: CoStar boasts a 93% quarterly renewal rate, with its multifamily marketplace Apartments.com achieving a remarkable 99% renewal rate, underscoring the platform's significance and customer stickiness in the industry.
- Investment and Buyback: Despite an $850 million investment in Homes.com leading to net operating losses, CoStar plans to cut $300 million in spending and has authorized a $1.5 billion stock buyback, projecting an EBITDA of approximately $770 million for 2026, indicating confidence in future profitability.
See More
U.S. Retail Market Outlook Remains Stable
- Retail Vacancy Forecast: According to CoStar's latest forecast, U.S. retail vacancy rates are expected to rise slightly in the first half of 2026, approaching 4.4%, before declining in the latter half, indicating market stability and potential recovery signs.
- Store Closure Trends: Despite a bifurcated sales environment, store closures are projected to increase in the first half of 2026, with full-year net absorption expected to total just over 16 million square feet, marking the third lowest level of demand in the past decade, reflecting weak market demand.
- Demand Recovery Signals: Brandon Svec, CoStar's national director of retail analytics, noted that signs of demand recovery in the second half of 2025 indicate stabilization in retail fundamentals after two consecutive quarters of decline, with a slowdown in closures and a surge in backfill demand.
- Risk Factors Analysis: While the current forecast suggests balance, there are downside risks, particularly regarding the uncertainty of tariff impacts, which may lead retailers and suppliers to face imminent price increases, potentially straining household budgets and dampening discretionary spending.
See More
CoStar Group Stock Investment Opportunity Analysis
- Rating Change: Wells Fargo lowered CoStar Group's price target from $55 to $48 with an Underweight rating, citing recent declines in information services stocks due to AI-related concerns, although they view many market reactions as unwarranted, indicating attractive buying opportunities.
- Analyst Upgrade: BTIG analyst Jake Fuller upgraded CoStar Group from Neutral to Buy with an $80 price target, highlighting low market expectations and noting that Homes.com is gaining momentum, with an upcoming AI-driven product update expected to resonate with investors.
- Revenue Forecast Increase: BTIG raised revenue estimates for CoStar Group for Q4 and FY 2026, anticipating a ramp-up in bookings and double-digit organic growth, suggesting the company may exceed Street expectations and demonstrating strong business potential.
- Market Environment Analysis: Despite the downward pressure in the AI market, CoStar Group is still viewed as an attractive investment due to its proprietary data and information analytics services, showcasing its competitive edge in the global market context.
See More
JPMorgan: AI Disruption Fears Overstated for Software Sector
- Market Rebound Expectations: JPMorgan believes that while the market's outlook on AI disruption in the software sector is overly pessimistic, certain software companies are demonstrating greater resilience, potentially providing rebound opportunities for investors, especially given the current overly bearish sentiment.
- Extreme Price Volatility: Analysts point out that the extreme price action in software stocks has led to unrealistic expectations regarding AI disruption, which may prompt a rotation back into higher-quality companies, thereby improving portfolio performance.
- AI Profitability Gains: Companies in the S&P 500 that have adopted AI have seen net margins expand by approximately 2 to 3 percentage points more than their peers, indicating that AI technology is already delivering productivity gains and reflecting that corporate adoption is enhancing profitability.
- ETF Performance Decline: The State Street SPDR S&P Software & Services ETF (NYSE:XSW) is down 20.58% year-to-date, illustrating the overall pessimistic sentiment towards the software sector, despite some companies potentially benefiting from AI infrastructure demand.
See More
Homes.com Releases Home Price Trends Report Through January 2026
- Continued Price Appreciation: As of January 2026, the nationwide median home sale price increased from $370,000 in January 2025 to $374,900, with an average annual growth rate of 2.8%, indicating market stability and potential investment appeal.
- Improved Negotiation Balance: The inventory of homes available for purchase equated to four months of supply, and the median days on the market was nearly 12 weeks, suggesting a balanced negotiating power between buyers and sellers, which could enhance market activity.
- Regional Market Disparities: Philadelphia saw the highest median home price growth at 8.6%, while cities in the South and West, such as Raleigh, North Carolina, experienced declines of -4.3%, reflecting significant regional market differences.
- Optimistic Market Outlook: Brad Case, Chief Residential Economist at Homes.com, noted that while home prices continue to rise, the pace is no longer alarming as in previous years; combined with income growth and declining mortgage rates, this significantly improves affordability for buyers, suggesting a positive outlook for the spring homebuying season.
See More
CoStar Group Faces Investment Challenges and Stock Price Pressure
- Data Platform Advantage: CoStar's commercial data platform, built on nearly four decades of data collection and a 93% renewal rate, creates a deep lock-in effect that is difficult to replicate; despite its stock price being nearly halved in the past six months, its commercial core remains robust.
- Residential Investment Dilemma: CoStar invested $850 million into Homes.com in 2025, resulting in a net operating loss, and although management plans to cut over $300 million in investment, breakeven for this segment is not expected until 2030.
- Margin Improvement: The information and marketplace segment achieved a 47% profit margin in Q3 2025, up 400 basis points year-over-year, driven by a 23% increase in CRE transaction volume, showcasing the strength of its core business.
- Stock Buyback Plan: CoStar's board authorized a $1.5 billion stock buyback and holds $942 million in net cash, with the stock currently trading at about 23 times the 2026 EBITDA forecast, indicating relative attractiveness.
See More
CoStar Group Stock Experiences Significant Volatility
- Stock Decline: CoStar Group's stock has nearly halved over the past six months, currently priced at $48.97 with a market cap of $21 billion, reflecting investor concerns over its residential business despite the stability of its commercial core.
- Data Network Effects: CoStar has established a robust data network by connecting 8.5 million properties with over 230,000 professionals, facilitating deal closures and demonstrating its competitive edge in the commercial real estate sector.
- High Renewal Rates: CoStar boasts a 93% quarterly renewal rate, with its multifamily marketplace Apartments.com achieving a remarkable 99% renewal rate, underscoring the platform's significance and customer stickiness in the industry.
- Investment and Buyback: Despite an $850 million investment in Homes.com leading to net operating losses, CoStar plans to cut $300 million in spending and has authorized a $1.5 billion stock buyback, projecting an EBITDA of approximately $770 million for 2026, indicating confidence in future profitability.
See More
U.S. Retail Market Outlook Remains Stable
- Retail Vacancy Forecast: According to CoStar's latest forecast, U.S. retail vacancy rates are expected to rise slightly in the first half of 2026, approaching 4.4%, before declining in the latter half, indicating market stability and potential recovery signs.
- Store Closure Trends: Despite a bifurcated sales environment, store closures are projected to increase in the first half of 2026, with full-year net absorption expected to total just over 16 million square feet, marking the third lowest level of demand in the past decade, reflecting weak market demand.
- Demand Recovery Signals: Brandon Svec, CoStar's national director of retail analytics, noted that signs of demand recovery in the second half of 2025 indicate stabilization in retail fundamentals after two consecutive quarters of decline, with a slowdown in closures and a surge in backfill demand.
- Risk Factors Analysis: While the current forecast suggests balance, there are downside risks, particularly regarding the uncertainty of tariff impacts, which may lead retailers and suppliers to face imminent price increases, potentially straining household budgets and dampening discretionary spending.
See More
CoStar Group Stock Investment Opportunity Analysis
- Rating Change: Wells Fargo lowered CoStar Group's price target from $55 to $48 with an Underweight rating, citing recent declines in information services stocks due to AI-related concerns, although they view many market reactions as unwarranted, indicating attractive buying opportunities.
- Analyst Upgrade: BTIG analyst Jake Fuller upgraded CoStar Group from Neutral to Buy with an $80 price target, highlighting low market expectations and noting that Homes.com is gaining momentum, with an upcoming AI-driven product update expected to resonate with investors.
- Revenue Forecast Increase: BTIG raised revenue estimates for CoStar Group for Q4 and FY 2026, anticipating a ramp-up in bookings and double-digit organic growth, suggesting the company may exceed Street expectations and demonstrating strong business potential.
- Market Environment Analysis: Despite the downward pressure in the AI market, CoStar Group is still viewed as an attractive investment due to its proprietary data and information analytics services, showcasing its competitive edge in the global market context.
See More
JPMorgan: AI Disruption Fears Overstated for Software Sector
- Market Rebound Expectations: JPMorgan believes that while the market's outlook on AI disruption in the software sector is overly pessimistic, certain software companies are demonstrating greater resilience, potentially providing rebound opportunities for investors, especially given the current overly bearish sentiment.
- Extreme Price Volatility: Analysts point out that the extreme price action in software stocks has led to unrealistic expectations regarding AI disruption, which may prompt a rotation back into higher-quality companies, thereby improving portfolio performance.
- AI Profitability Gains: Companies in the S&P 500 that have adopted AI have seen net margins expand by approximately 2 to 3 percentage points more than their peers, indicating that AI technology is already delivering productivity gains and reflecting that corporate adoption is enhancing profitability.
- ETF Performance Decline: The State Street SPDR S&P Software & Services ETF (NYSE:XSW) is down 20.58% year-to-date, illustrating the overall pessimistic sentiment towards the software sector, despite some companies potentially benefiting from AI infrastructure demand.
See More
Homes.com Releases Home Price Trends Report Through January 2026
- Continued Price Appreciation: As of January 2026, the nationwide median home sale price increased from $370,000 in January 2025 to $374,900, with an average annual growth rate of 2.8%, indicating market stability and potential investment appeal.
- Improved Negotiation Balance: The inventory of homes available for purchase equated to four months of supply, and the median days on the market was nearly 12 weeks, suggesting a balanced negotiating power between buyers and sellers, which could enhance market activity.
- Regional Market Disparities: Philadelphia saw the highest median home price growth at 8.6%, while cities in the South and West, such as Raleigh, North Carolina, experienced declines of -4.3%, reflecting significant regional market differences.
- Optimistic Market Outlook: Brad Case, Chief Residential Economist at Homes.com, noted that while home prices continue to rise, the pace is no longer alarming as in previous years; combined with income growth and declining mortgage rates, this significantly improves affordability for buyers, suggesting a positive outlook for the spring homebuying season.
See More
