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In a broader note on eRealty stocks, they said OPEN’s results continue to be shaped by the backlog of homes purchased before the market downturn.
“OPEN looks to be tracking to >5K homes sold for 2Q with around two-thirds of that from the old cohort, leaving it with 800 still to move,” the analysts wrote.
“We are seeing double-digit (averaging ~12%) gross margins on homes bought/sold since the downturn. Those two things should be a positive for the 3Q outlook with sales more heavily weighted to newer cohort inventory and that should push unit economics back to positive.”
However, the analysts estimate that OPEN needs a quarterly sales volume of ~4.8K homes to reach EBITDA break-even, and “it isn’t buying enough to get there (current purchase run-rate ~2.4K).”
“OPEN broke through our prior $3 PT, and we raise to $4.50 with more confidence in the margin profile (wider purchase spreads, reduced overhead). Our target is based on 40K in annual homes sold at a 6% contribution margin and 3.8% EBITDA margin in 2026.”
Despite the positive commentary, OPEN shares are down more than 7% at $2.94 on Friday at the time of writing.
