CoStar’s $5 billion data moat is entering an earnings-harvest phase, with margin expansion and a $84.07 probability-weighted five-year target offset by residential execution risk.
Overview
CoStar Group is a global real estate information and marketplace company with Commercial Real Estate and Residential Real Estate segments. Its revenue base is unusually visible: approximately 90% is subscription-based, 73% is covered by annual or multiyear contracts, and five-year subscriber renewal rates are approximately 95%. The company’s moat rests on nearly four decades of proprietary data collection, over $5 billion of cumulative investment, workflow integration, and network effects across CoStar Suite, LoopNet, Apartments.com, and Homes.com. **Q2 2026 marked the profitability inflection:** revenue rose 18% year over year to $925 million, Adjusted EBITDA increased 116% to $184 million, and margin expanded to 20%; Residential also posted its first positive Adjusted EBITDA at $12 million. However, full-year revenue guidance fell to $3.715–$3.755 billion and bookings declined 26% year over year. At roughly $29.30, valuation is approximately 21.5x forward EPS and 3.1x forward sales, versus historical averages of 75.8x P/E and 8.6x P/S. Catalysts are sustained Residential profitability, bookings recovery, cost leverage, buybacks, and a return toward historical multiples.