CoStar Group, Inc.
AI Valuation
AI-generated fair value estimate for this company.
AI Fair Value
$38.94
Market Price
$27.55
Undervalued By
29.3%
Method: 10-year unlevered FCF DCF: $380M normalized FCF base (post Homes.com-investment-phase run rate); 20% annual FCF growth for years 1-5 (Homes.com margin ramp toward $1.25B 2028 EBITDA target); 8% for years 6-10; 9% discount rate; 3% terminal growth; $150M net cash; 405M diluted shares outstanding.
Reasoning: CoStar's recurring, high-margin data/marketplace model (CoStar, LoopNet, Apartments.com, Homes.com) and entrenched switching costs justify a growth-phase DCF; the elevated near-term growth rate reflects the Homes.com investment ramp turning EBITDA-positive by 2030 per management guidance, tapering to a mature SaaS-like growth rate thereafter.