Fathom Holdings wins price target raise at Roth

Roth Capital Markets analyst Darren Aftahi said in an Oct. 13 earnings preview that Fathom Holdings (Fathom Holdings Stock Quote, Chart, News, Analysts, Financials NASDAQ:FTHM) is positioned to benefit from its recent capital raise, which he said should accelerate the company’s Elevate agent onboarding program and drive gross-margin expansion through 2025 and into 2026.

Aftahi maintained his “Buy” rating and raised his 12-month target price to US$2.50 from US$2.00, implying roughly 2× FY26 gross profit of US$43.2-million and margin approaching double digits by the end of 2026.

Fathom is a cloud-based, full-service real estate brokerage that operates on an all-virtual platform, charging agents a fixed fee per transaction. The company earns commission income from assisting clients in buying, selling, or leasing properties, with agents remitting a small fixed portion of each transaction to Fathom. It is headquartered in Cary, North Carolina.

Aftahi said the new funding “could help bolster Fathom’s ambitions to expand its Elevate program, which generates three to four times higher gross profit per transaction, by adding incremental features that enhance its value.”

He said this approach allows Fathom to “lift gross margins without relying on broad agent expansion,” instead emphasizing the recruitment of higher-quality agents within its existing base and through targeted acquisitions.

“As the program expands,” Aftahi said. “Fathom could face dual tailwinds for margins if the housing market improves — expanding gross margins from Elevate while improving attach rates on ancillary services.”

For Q3 2025, Aftahi models approximately 15,300 agents, up 24% year over year, completing about 11,300 transactions, or roughly 0.75 per agent. Should market conditions remain stable, he said transaction volume could reach 13,000, implying upside to his model. He forecasts revenue of US$102.1-million (up 22% year over year), including US$5.8-million in ancillary revenue (up 12% year over year), and gross profit of US$8.1-million, representing a 7.9% margin. That figure is 80 basis points lower year over year due to higher capping and transaction mix skewing toward more productive agents.

Aftahi expects an Adjusted EBITDA loss of US$2.3-million in the quarter but sees operating expenses trending lower sequentially. He said the company’s capital raise positions it to pursue more aggressive agent recruitment and expand onboarding capacity toward its initial 100-agent-per-month target.

Aftahi said Fathom should post an Adjusted EBITDA loss of US$6.7-million on US$411.5-million in revenue in fiscal 2025, improving to Adjusted EBITDA of US$3.3-million on US$478.1-million in fiscal 2026.

“We expect 2026 to be a formative year for Fathom under its new gross-margin model,” he said, as the Elevate program matures and ancillary revenue gains momentum.

-30-