RBC Capital Markets Expects Redfin's Revenue Growth To Be Consistent Year-Over-Year

Redfin Corp RDFN reported solid fourth-quarter results Thursday and mixed Q1 guidance.

RBC Capital Markets raised its 2019 estimates have been raised based on the real estate company's comments on a mass marketing campaign that should boost revenue growth. 

The Analyst

RBC Capital Markets’ Mark S.F. Mahaney maintained an Outperform rating on Redfin and raised the price target from $20 to $26.

The Thesis

Redfin reported Q4 revenue of $124.1 million, ahead of the Street expectation of $117.1 million.

Although the core real estate services segment continued to decline, upside came from the properties segment, which recorded 90-percent sequential growth, Mahaney said in a Thursday note. 

The company’s EBITDA beat the Street estimate on the back of revenue upside and better opex leverage. Monthly average visitors rose 18 percent year-on-year to 25.2 million, with the U.S. market share of homes sold value rising 10 basis points, the analyst said. 

Redfin guided to Q1 revenue of $101.5-$105.1 million, in-line with expectations. Yet the net loss guidance of negative $69.2-$67.8 million was significantly below the previous consensus estimate of negative $45.4 million.

Despite the net loss guidance coming in lower than expected, Redfin appeared confident of their mass marketing initiative and a healthy housing market, Mahaney said. These should enable the company to achieve revenue growth in 2019 that is consistent with 2018, he said. 

RBC raised the revenue and EBITDA estimates for 2019 by 17 percent to $641 million and from a $51-million loss to a $49-million loss.

Price Action

Redfin shares were up 8.1 percent at $19.82 at the time of publication Friday. 

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