Morgan Stanley has revised its outlook on CBRE Group (CBRE, Financial), reducing the price target for the company's shares from $165 to $160. Despite the reduction, the investment firm maintains an Overweight rating on CBRE's stock, indicating continued confidence in its performance potential.
In addition to the price target adjustment, Morgan Stanley has also lowered its earnings per share (EPS) forecasts for CBRE. The new EPS estimates are $5.78 for fiscal year 2025 and $6.68 for fiscal year 2026, down from the previous projections of $5.95 and $6.80, respectively. These adjustments reflect a slightly more cautious earnings outlook for the company in the coming years.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 10 analysts, the average target price for CBRE Group Inc (CBRE, Financial) is $144.70 with a high estimate of $165.00 and a low estimate of $112.00. The average target implies an upside of 18.80% from the current price of $121.80. More detailed estimate data can be found on the CBRE Group Inc (CBRE) Forecast page.
Based on the consensus recommendation from 13 brokerage firms, CBRE Group Inc's (CBRE, Financial) average brokerage recommendation is currently 2.0, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for CBRE Group Inc (CBRE, Financial) in one year is $117.63, suggesting a downside of 3.42% from the current price of $121.8. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the CBRE Group Inc (CBRE) Summary page.
Key Business Developments
Release Date: February 13, 2025
- Core Earnings: Best quarter ever for core earnings.
- Free Cash Flow: Record free cash flow, exceeding $1.5 billion for the year.
- Net Revenue Growth: Resilient businesses grew net revenue by 16% in Q4 and 14% for the year.
- Leasing Revenue: Global leasing revenue grew 15%, with US office leasing up 28%.
- Property Sales Revenue: Global property sales revenue increased by 35%.
- Mortgage Origination: Business up 37%, with origination fees increasing by 76%.
- Advisory SOP: Increased by 34% with improved margins.
- GWS Segment Revenue: Net revenue grew 18%, with facilities management net revenue up 24%.
- Project Management Revenue: Full-year growth of 10%, with Turner & Townsend achieving 19% growth.
- RAI Segment SOP: Increased to $150 million in Q4, led by development business.
- Investment Management AUM: Ended 2024 at $146 billion, flat for the year.
- Capital Allocation: $2 billion deployed in 2024 across M&A, real estate, co-investment, and share repurchases.
- Share Repurchases: Over $800 million worth of shares repurchased since the end of Q3.
- 2025 Core EPS Outlook: Projected range of $5.80 to $6.10, representing over 16% growth at the midpoint.
- Data Center Contribution: Increased from 3% to almost 10% of core EBITDA in 2024.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- CBRE Group Inc (CBRE, Financial) reported its best quarter ever for core earnings and free cash flow, with broad strength across its business segments.
- The acquisition of Industrious and the consolidation of building management businesses into the Building Operations and Experience segment are expected to enhance flexibility and expertise.
- The combination of CBRE project management with Turner & Townsend is anticipated to create a large, uniquely positioned program and project management business with multiple avenues for resilient revenue growth.
- The company has reorganized into four business segments, with two segments entirely comprised of resilient businesses that generated $1.4 billion of SOP in 2024, growing organically at a double-digit rate.
- CBRE Group Inc (CBRE) has high confidence in its future, evidenced by significant share repurchases and a strong outlook for 2025, with core EPS projected to grow more than 16% at the midpoint of the range.
Negative Points
- Despite strong performance, CBRE Group Inc (CBRE) acknowledges that capital markets activity is still well below peak levels, impacting transaction revenue.
- The investment management business saw a decline in operating profit in Q4, partly due to increased costs in anticipation of capital raising.
- The company faces uncertainties around currency headwinds and interest rate trajectories, which could impact financial performance.
- The integration of Turner & Townsend with CBRE project management is complex, and initial SOP growth in this segment is expected to be slightly below trend.
- CBRE Group Inc (CBRE) is cautious about the trajectory of rates and the potential impact on capital markets recovery, which remains a smaller portion of its business.
