Buy Real Matters stock for a double, ATB says

Real Matters is set for a stronger second half of the year, says ATB Capital Markets analyst Martin Toner, who believes improving mortgage volumes and potential new business wins could drive the stock higher.

Toner rates Real Matters (Real Matters Stock Quote, Chart, News, Analysts, Financials TSXV:REAL) as Outperform with a 12-month price target of $12.00.

In Toner’s preview of Real Matters’ upcoming Q2 fiscal 2025 results, scheduled for release on April 30, he expects revenue to decline slightly year-over-year, citing lingering effects from higher mortgage rates earlier in the year. However, he remains optimistic about Real’s long-term prospects, pointing to signs of resilience in its U.S. Appraisal segment, ongoing market share gains, and potential upside from new client additions in its Title business.

“We maintain our Outperform rating and $12.00 PT, keeping our near- and long-term estimates unchanged, given recent volatility in U.S. rates and mortgage volumes,” Toner said.

Toner noted that recent strong origination data from major U.S. banks like Wells Fargo and JP Morgan could provide a stronger backdrop for Real’s upcoming results. However, he cautioned that those results may not fully reflect across all of Real’s client base.

“We note that Wells Fargo Inc. (WFC-N, NR) and JP Morgan Inc. (JPM-N, NR) both reported strong y/y increases in origination volumes for Q1 (up 25% and 47% y/y, respectively),” he said. “Our estimates do not contemplate those gains to be typical across REAL’s customers. Our base case, however, remains for a more sustained recovery in H2/25. We will also be looking for indications of new customer wins in Title. We maintain our Outperform rating and $12.00 PT, keeping our near- and long-term estimates unchanged, given recent volatility in US rates and mortgage volumes.”

Toner thinks Real Matters will generate approximately $2.1-million in adjusted EBITDA on $189.4-million in revenue in fiscal 2025. He expects those numbers to improve to $37.4-million in adjusted EBITDA on $238.5-million in revenue in fiscal 2026.

“Our price target represents a 100.6% return to target, and is based on our discounted cash flow (DCF) valuation, using an 11.5% discount rate and 2.5% terminal growth rate (both unchanged),” Toner said. “Our discounted terminal value of $309mm represents 56.1% of total enterprise value (EV) of $551.4mm, as well as an 8.5x EV/EBITDA multiple, and a 1.4x EV/Revenue multiple.”

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