On July 29, CoStar declined 12.92% overnight, trading at $26.41/share. The sell-off was triggered by the company's Q2 earnings release, where revenue fell short of expectations and forward guidance disappointed, prompting profit-taking after a 10%-plus rally in the prior two sessions.

CoStar reported Q2 adjusted EPS of $0.32, beating the consensus estimate of $0.29 by 10.34%, with net income surging 817% year-over-year. However, revenue of $925 million came in below the $928.8 million estimate. More critically, Q3 guidance of $935M-$945M in revenue and $0.31-$0.34 in adjusted EPS fell significantly short of analyst expectations of $967.5M and $0.38, respectively. Full-year revenue outlook was revised to $3.72B-$3.76B, also below the $3.80B consensus.

The weak guidance confirmed concerns previously flagged by RBC, which warned of lower-than-expected Q2 bookings due to challenging comps and interest rate headwinds. Baird had also downgraded the stock to neutral in mid-July. The current institutional average price target stands at approximately $43.26, with Jefferies maintaining a buy rating but having lowered its target from $55 to $45.

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