Shares of Opendoor Technologies, the real estate company specializing in buying and selling homes, continue to experience a significant rally. After a remarkable 19% gain the previous day, the stock soared by another 15% to reach $4.73 in Thursday’s trading session. This surge has propelled the stock’s year-to-date increase to approximately 300%, positioning it for its most successful year since going public as an iBuyer in 2020, according to Dow Jones Market Data.
Growing investor optimism has likely contributed to the impressive performance of Opendoor’s shares. A recent upgrade from Wall Street analysts at Keefe, Bruyette & Woods, led by Ryan Tomasello, could be a contributing factor. The firm raised its rating on Opendoor to “Market Perform” from “Underperform” due to the perceived lack of downside catalysts. Additionally, they increased their price target from $1.65 to $3.50 and adjusted revenue estimates accordingly.
The analysts at Keefe acknowledge that the housing market appears to be stabilizing in 2024, which could serve as a positive driver for Opendoor’s sentiment. They point out that the recent decline in mortgage rates further supports this outlook. Consequently, the team’s estimates for 2024 now exceed the consensus expectations. However, it is worth mentioning that the Keefe analysts still have reservations regarding the current valuation of Opendoor and question the long-term scalability of its business model.
The 10-year Treasury yield has witnessed a decline, which the analysts believe may work in favor of Opendoor. The reduction in mortgage rates has also enticed some buyers back into the market. Nevertheless, the team cautions that home purchase volumes are still approximately 50% below the necessary levels for breakeven support.
Interestingly, Keefe’s stance aligns with a significant portion of other analysts covering Opendoor. According to FactSet, 58% of them hold a Neutral rating on the stock.
As of Wednesday’s close, Opendoor’s shares have gained 12% throughout the week.