CBRE Group is poised to be one of the premier beneficiary of a recovery in commercial real estate transactions, according to Morgan Stanley. The bank upgraded the commercial real estate services stock to overweight from equal weight and raised its price target to $160 per share from $115. Morgan Stanley’s forecast implies about 28% upside from Tuesday’s close. CBRE 1Y mountain CBRE Group stock. Analyst Ronald Kamdem noted that the commercial real estate sector saw a 20% year-over-year jump in net revenue growth in the third quarter of 2024, which he expects to continue in 2025. He also pointed to a cohort of catalysts that could drive the stock moving forward, including an uptick in commercial mortgage backed securities issuance and spreads, as well as a better sense of the value of assets after the Covid-19 pandemic, when commercial real estate was under immense pressure. “Indeed, it may be underappreciated that CBRE has significantly evolved since the financial crisis; today ~60% of EBITDA comes from resilient business lines (vs peers at 40-55%) including project management, facilities management, property management, valuation, loan servicing and investment management,” Kamdem said. “Importantly the company sees opportunity for double digit growth in these resilient businesses and although they may be lower margin than the transactional businesses they provide welcome visibility, stability and growth through cycle. In 3Q24 global workplace solutions grew net revenues +19% YoY including double-digit organic growth,” the analyst added. Most analysts are bullish on the stock. Of the 12 who cover CBRE, eight have a buy or a strong buy rating, according to LSEG. The remaining four have a hold rating. The average analyst price target implies upside of more than 18%. CBRE shares are coming off a strong year, rising 41% in 2024. That’s well above the S & P 500’s 23% advance during that time.
