KeyBanc Bullish On Real Estate SaaS: Resumes Coverage Of AppFolio, RealPage

KeyBanc Capital Markets resumed coverage of RealPage Inc RP and AppFolio Inc APPF Monday.

The Analyst

Jason Celino resumed coverage of RealPage Inc with an Overweight rating and $76 price target. The analyst resumed coverage of AppFolio Inc with a Sector Weight rating.

The Thesis

KeyBanc is resuming coverage is due to strong demand trends and data monetization opportunities in the real estate SaaS market — a good sign for both AppFolio and RealPage, Celino said in a Monday note. (See his track record here.)

“We believe the increased use of data, for use cases in automating the leasing and tenant management lifecycle, presents ongoing tailwinds and potential share gains for RealPage and AppFolio,” the analyst said.

RealPage’s Overweight rating is due to robust data opportunities and a strong growth and profitability profile, he said.

“Conversations with real estate software implementation partners also reinforced RealPage’s strong competitive positioning. Our scenario analysis gives us confidence we could see at least 50% upside over the next three years as the company drives 150 basis points of EBITDA margin expansion to 2022, with potential acquisitions adding upside to estimates."

Celino is optimistic, but said positive investor sentiment is priced into AppFolio amid high growth opportunities.

AppFolio remains committed to building its presence in property management SaaS, the analyst said.

“With the company continuing to add more solutions to its offerings, and if AppFolio can maintain 20%-plus unit growth in property management, we could see mid-to-upper-20% growth [being] sustainable over the next three to four years, though a step up in investments for new solutions is leading to more limited margin expansion opportunities.”