Business model

CBRE Group lands strong buy rating at RJ, citing resilient business model (NYSE:CBRE)

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Raymond James analyst Patrick O’Shaughnessy updated the CBRE group on Friday (NYSE: CBRE) to Strong Buy from Outperform based on its resilient business model and underleveraged balance sheet.

Shares of commercial real estate businesses go up 1.5% in pre-market commerce.

CBRE’s (CBRE) business model is designed to “weather the storm” in the event of a downturn in brokerage activity, O’Shaughnessy wrote in a note to clients.

On a broad scale, U.S. capital markets activity remained “pretty healthy” in the second quarter, with deal volumes climbing 24% year-on-year, O’Shaughnessy noted, according to data from Real Capital Analytics. It was the best second-quarter result in its data set dating back to 2001, led by retail and apartment volumes.

Additionally, office leasing activity jumped 36% to 47.2 million square feet year-over-year in the second quarter, suggesting that “companies continue to feel more comfortable taking longer-term decisions about office footprints,” O’Shaughnessy wrote, citing data from JLL Research.

The upbeat coverage comes ahead of CBRE’s (CBRE) second-quarter results scheduled for Aug. 4. A group of seven analysts expect Q2 EPS of $1.41, implying a year-over-year increase of 3.69%. And five analysts see second-quarter revenue rising 19.9% ​​to $7.74 a year in the second quarter.

Towards the end of June, SA contributor EG Capital thought CBRE Group was trading at a more reasonable valuation.