Analyst Note| Yousuf Hafuda |
CBRE Group reported third-quarter results that vastly exceeded analyst estimates, sending shares sharply higher by around 17%. The company reported third-quarter companywide fee revenue of $2.52 billion, a 13% decrease compared with $2.9 billion during the third quarter of 2019. Third-quarter adjusted EBITDA showed a smaller decline of around 3% on a year-over-year basis. Although certainly not breathtaking, these results are encouraging amid the backdrop of the coronavirus crisis which caused activity in the commercial real estate industry to grind to a halt during the second quarter of 2020. To provide some perspective, second-quarter fee revenue declined by 21%, while adjusted EBITDA declined by 43%. Despite the dramatically improved performance, we are maintaining our $60 per share fair value estimate for narrow-moat CBRE.