Fathom Holdings stock target cut to $4.50, retains buy rating

On Friday, Fathom Holdings Inc. (NASDAQ: FTHM) experienced a revision in its stock outlook by DA Davidson, with the price target being lowered to $4.50 from the previous $6.50. Despite the reduction, the firm maintained a Buy rating on the company’s shares. This adjustment follows Fathom Holdings’ fourth-quarter results for 2023, which did not meet expectations in terms of revenue and key profitability metrics.

The company, which operates in the residential real estate market, has been navigating through industry challenges. However, it surpassed expectations with the number of new agents in the fourth quarter and has sustained this momentum into the first quarter of 2024. Fathom Holdings also remains optimistic about its financial future, anticipating adjusted EBITDA profitability for the entire calendar year of 2024. This confidence is bolstered by recent strategic moves, including cost reductions and adjustments to agent fees.

According to DA Davidson, Fathom Holdings is also projected to generate a positive operating cash flow as early as the second quarter of 2024. This outlook is based on the company’s current financial strategies and market performance. The real estate firm’s ability to add agents in the fourth quarter, despite the market’s challenges, has been a positive indicator of its operational strength.

The lowered price target reflects the immediate past performance and market conditions, yet the continued Buy rating indicates an expectation of recovery and growth for Fathom Holdings. The company’s proactive measures to improve its financial position are seen as steps that could lead to a more stable and profitable future.

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