Young attended the Mortgage Banker Association’s (MBA) Annual Convention in Denver, which took place from October 22-25 and yesterday released an update on Real Matters to subscribers in which he maintained his “Buy” rating and one-year price target of $16.00 on the stock, implying a return of 60 per cent at the time of publication.
“While we acknowledge the selection bias of discussions at an industry event, most of the conversations we had were optimistic about the future and about Real Matters’ ability to take share,” the analyst says. “We spoke with multiple customers who are happy with Real Matters’ execution and impact on the customer experience. Despite mortgage market weakness, particularly refi, we remain confident that market share gains, principally driven by recent Tier 1 wins in the appraisal business, can offset the headwinds.
Young notes that there may be an opportunity for investors to take advantage of a pullback in shares of Real Matters, as a lockup imposed on shareholders who held more than 0.5 per cent of its shares at the time of the IPO will expire on November 7.
“…we see significant risk of an increased level of selling,” Young says of the event.
Young thinks Real Matters will generate EBITDA of (U.S.) $4.9-million on revenue of $298.7-million in fiscal 2017. He expects those numbers improve to EBITDA of $13.6-million on a topline of $365.5-million the following year.
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