Cushman & Wakefield Earnings: Near-Term Debt Maturities Refinanced as Outsourcing Growth Falters

No-moat-rated Cushman & Wakefield reported lackluster third-quarter results as declines in commercial real estate transaction volume affected its brokerage business while growth in its outsourcing business faltered. We think the brokerage business will remain under pressure in the near term, given our macroeconomic outlook and rising interest rates. The company reported adjusted EPS of $0.21 in the third quarter, down from $0.43 in the year-ago period. Companywide fee revenue was down 11% on a local-currency basis compared with the previous year, reported at $1.59 billion. Adjusted EBITDA came in at $150 million, 27% lower compared with the third quarter of 2022 on a local-currency basis. This resulted in adjusted EBITDA margin of 9.4% for the quarter, down 192 basis points from the third quarter of last year. We are reducing our fair value estimate to $17 per share from $19 after incorporating a slower recovery in the brokerage business in the upcoming years and modeling slightly lower growth for the outsourcing business.