Tuesday, Real Brokerage Inc. (NASDAQ:REAX) saw its price target increased to $6.00 from $4.00 by Jones Trading, with a continued Buy rating. The firm highlighted the company's significant agent growth and technological advantages as key drivers for the improved price target.
On Tuesday, Real Brokerage reported an 8% quarter-to-date increase in its agent count, which now exceeds 18,000, marking an 80% year-over-year growth from the first quarter of 2023. This expansion comes at a time when the overall industry is experiencing a decline in agent numbers. The company's commission model and proprietary technology are credited for this positive trend.
Real Brokerage's introduction of private label and pro teams has been successful, allowing agents to maintain their existing brands while joining the company. This initiative has resulted in the addition of 300 agents in the first quarter of 2024 and is anticipated to double in the next quarter as the recruitment pipeline reaches a record size.
Financially, Real Brokerage outperformed expectations with a record adjusted EBITDA of $3.6 million, surpassing the predicted figure of negative $2.1 million. However, earnings per share (EPS) fell short at negative $0.09, missing both the analyst's estimate of negative $0.05 and the consensus estimate of negative $0.04. This discrepancy was largely due to a one-time settlement charge of $9.25 million related to the National Association of Realtors (NAR), equivalent to $0.05 per share.
The company's gross margin, inclusive of revenue share, improved to 5.8% from 5.0% in the first quarter of 2023, demonstrating the platform's scalability. As more agents join Real Brokerage, the company is expected to grow efficiently without incurring significant additional expenses. Additionally, their mortgage and title platforms are projected to contribute to margin growth into 2025.
InvestingPro Insights
Real Brokerage Inc. (NASDAQ:REAX) has been making headlines with its impressive agent growth and technological innovations, and recent data from InvestingPro further underscores the company's robust financial performance and market potential. According to InvestingPro data, Real Brokerage boasts a striking revenue growth of 80.52% over the last twelve months as of Q1 2023, which may capture the attention of investors looking for high-growth opportunities. The company's stock has also experienced a significant return over the last week of 8.29%, indicating a strong short-term performance that aligns with the positive sentiment from Jones Trading's increased price target.
While the company's P/E ratio stands at a negative -33.15, reflecting its current lack of profitability, InvestingPro Tips highlight that analysts anticipate sales growth in the current year, which could be a harbinger of future profitability. Moreover, despite weak gross profit margins of 9.12%, the company's liquid assets exceed short-term obligations, suggesting financial resilience. Investors may find these insights particularly valuable, especially when considering the company's high Price / Book multiple of 21.22, which may warrant careful evaluation of its asset valuation.
For those interested in a deeper dive into Real Brokerage's financials and market performance, additional InvestingPro Tips are available at https://www.investing.com/pro/REAX. With these insights, investors can make more informed decisions, and by using the coupon code PRONEWS24, they can get an additional 10% off a yearly or biyearly Pro and Pro+ subscription to access even more expert tips and data.
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