UPDATE: Oppenheimer Downgrades Redfin Corp. (RDFN) to Underperform

Oppenheimer analyst Jason Helfstein downgraded Redfin Corp. (NASDAQ: RDFN) from Perform to Underperform with a price target of $1.30.

The analyst comments "We believe Redfin’s core business is fundamentally flawed with fixed-cost model for agents vs. 100% commission for industry. This prevents RDFN from optimizing margins when housing markets decline and prevents share gains when markets rebound, lagging markets by 6–12 months, such as in '20. With Fannie Mae forecasting US existing home sales declining 18% y/y in '22 and 22% in '23, we estimate that it will take ~two years for housing demand to return to meaningful growth. RDFN has $1.23B in net debt, with $661M '25 convertible note that will need refinancing in late-'23 to mid-'24 & will struggle to reach positive FCF. $1.30 SOTP target implies 3.7x ’23E GP vs. peers at 3.1x and ZG at 3.4x; therefore, we are downgrading shares to Underperform."

For an analyst ratings summary and ratings history on Redfin Corp. click here. For more ratings news on Redfin Corp. click here.

Shares of Redfin Corp. closed at $4.02 yesterday.

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