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RBC Capital Markets analyst Jimmy Shan started coverage of Colliers International Group (NASDAQ:CIGI) with an Outperform rating on Wednesday, citing the real-estate services company's "compounding-like qualities" in terms of attractive rate of return on invested capital.
"Weakness in the CRE brokerage business is clouding its long-term compounding potential," but it presents "an opportunity for long-term minded investors," Shan wrote in a note, viewing the lull in commercial real estate as cyclical rather than structural.
He pointed to Colliers' (CIGI) other businesses that should offset weakness in its Capital Markets unit, chiefly "its highly profitable & scalable Investment Management business, which we believe is underappreciated by the market, and Outsourcing & Advisory (totaling ~68% of ‘23E Adj. EBITDA) along with acquisitions."
The Outperform rate aligns with the average Wall Street analyst rating of Buy (3 Strong Buy, 5 Buy, 1 Hold).
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