Opendoor price target raised to a Wall Street high of $6 at Morgan Stanley
Morgan Stanley analysts raised their price target on Opendoor Technologies to the highest on Wall Street. However... they’re still not actually bullish on the online real estate company.
In a wide-ranging note on internet stocks as the Q3 earnings season heats up, analysts Brian Nowak and Matthew Cost (who covers Opendoor) wrote:
“While we see limited fundamental justification for OPEN’s recent outperformance, we also see the opportunity for a pivot back to home-buying (and significant operating leverage) should there be a stronger housing market recovery. Moreover, similar situations with other stocks have shown that higher valuations are not only often more sustainable than expected, but also create the opportunity for companies to raise capital and address challenges with the support of an enthusiastic shareholder base. With that in mind we mark our base case price target to market at $6.”
Morgan Stanley’s previous price target was $2. Analysts kept their “market perform” (or “hold”) rating on the company intact.
The obvious corollary here is GameStop, a company that has had a high value ascribed to the value of its cash based on the idea that CEO Ryan Cohen would be able to do a lot to transform the company with that money. Opendoor bulls are similarly enthused by the company’s turnaround prospects under its new management. Its biggest one-day gain on record came after news that cofounders Keith Rabois and Eric Wu were being added to the board of directors and that Shopify COO Kaz Nejatian was coming in to serve as CEO.
GameStop, without doing anything too revolutionary, has managed to turn around its business since its initial run as a meme stock, and has now strung together five consecutive quarters of positive operating cash flows for the first time in its history.
The sell side is pretty downbeat on Opendoor, with just one “buy” (or “buy” equivalent), five “hold,” and five “sell” ratings among analysts tracked by Bloomberg.
