Analyst Likes The Business Mix and Growth Profile Of Newmark Group

Commercial real estate services company Newmark Group Inc NMRK has a strong growth outlook, stemming from the business mix, according to one analyst.

The Analyst

Following the IPO quiet period expiry Tuesday, Wedbush analyst Jason Weaver initiated coverage of Newmark Group with an Outperform rating and a 12-month price target of $20.

The company was splintered from its former parent BGC Partners, Inc. BGCP in an IPO late last year.

The Thesis

Newmark Group is one of the fastest growing domestic commercial real estate services providers, Weaver said in a Tuesday note. The analyst likes the business mix and growth profile of the company in the current environment.

Weaver expects the company to maintain its rapid growth rate over the medium term due to aggressive recruitment efforts in mortgage banking and outsourced services. The analyst also sees profitability expanding from the implementation of its technology platform and cost controls.

Wedbush estimates earnings of $1.44 per share for the company in 2018, which could grow to $1.67 in 2019 through the acquisition of key personnel, not including the impact of any further acquisitions.

"We view the current market price as considerably undervalued, having the second lowest PE/g ratio of our comparable group of US CRE Brokers & Service Providers at 0.84," the firm said.

Price Action

Newmark debuted on Wall Street Dec. 15, closing the debut session down 0.4 percent at $13.95 from the $14 offer price. Since then, shares have risen above the offer price and gained over 13 percent.

Shares were down 0.6 percent at $15.47.

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