DA Davidson Upgrades Redfin On Additional Revenue Streams In Mortgage, Title Services

Redfin Corp RDFN is making steady progress in expanding the revenue streams in its Mortgage and Title businesses, according to DA Davidson.

The Analyst

DA Davidson’s Tom White upgraded Redfin from Neutral to Buy, while raising the price target from $18.50 to $25.00.

The Thesis

Redfin’s Mortgage and Title businesses could generate revenues of $174-$220 million and EBITDA (Earnings Before Interest, Tax, Depreciation and Amortization) of $45-$55 million by 2025, White said in the note.

He mentioned that the company was already providing Mortgage services in 16 markets and Title services in 13 markets.

By adding these affiliated offerings to its core brokerage offering, Redfin aims at providing a “more tightly integrated real estate transaction experience” to its customers, rather than the typical mixed solution of standalone brokerages, mortgage lenders and title companies, the analyst mentioned.

White believes that the Mortgage and Title businesses could contribute as much as 40% of White consolidated EBITDA by 2025.

He further wrote that investors do not seem to have given “sufficient consideration” to these opportunities as well as the ability of the company’s brokerage product to drive “industry-leading attach rates.”

Redfin Price Action

Shares of Redfin were up 2.31% to $21.25 at the time of publishing on Tuesday.