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Keefe Bruyette cuts Opendoor, Offerpad to Underperform on expected book value decline

Traitov

Keefe Bruyette & Woods, downgraded Opendoor (NASDAQ:OPEN) and Offerpad (OPAD) to Underperform from Market Perform as it expects 50% decline in 2023-end book values.

In its 2023 real estate technology outlook note, the research firm said it remains highly selective as stocks in the sector will remain volatile in 2023 due to their high risk premium.

The high risk premium is a result of wide range of potential valuation outcomes, exposure to turbulent real estate markets, and uncertain recession performance.

“… we believe Opendoor’s (OPEN) valuation will continue to be tethered to book value over the intermediate term until third-party marketplace economics represent a more material mix of its business, which we do not expect until late 2023/early 2024,” analyst Ryan Tomasello wrote in a note to clients.

Keefe Bruyette expects Offerpad’s (OPAD) book value destruction to continue in 2023. “We also believe capital needs are an even more relevant risk given its weak liquidity position, which stems from high redemptions with its 2021 SPAC deal,” Tomasello added.

SA Quant is bearish on Opendoor (OPEN) and Offerpad (OPAD) as they are both at high risk of performing badly.

However, Wall Street analysts on average are bullish on Opendoor (OPEN) and Offerpad (OPAD).

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