Compass stock price has done well in the past few months. Most recently, it has risen in the last five consecutive weeks and is sitting at its highest level since June 2022. It has soared by 335% from its lowest point in 2023. So, will the COMP share price surge after forming a giant megaphone pattern ahead of earnings?
Compass earnings preview
Compass, the giant technology company in the real estate industry, has done well in the past few years as it continued to gain market share. Its annual revenue stood at over $4.8 billion in 2023 and $5.3 billion in $5.34 billion in the trailing twelve months.
The Compass stock price will be in the spotlight on Tuesday as the company publishes its financial results. Analysts expect the numbers to show that its quarterly revenue rose by 25.68% in Q4 to $1.38 billion. That would be an impressive growth for a company that has been in business for years.
If these estimates are correct, they mean that its annual revenue will be $5.63 billion, up by 15.18% from a year earlier. Analysts anticipate that Compass’s revenue will rise by 18% in 2025 to $6.70 billion.
This revenue growth will be impressive considering that the real estate brokerage industry is facing major challenges after a key court ruling last year. That ruling forced agents to offer more disclosures to their customers before serving them.
Mortgage rates are rising
The sector is also facing challenges as mortgage rates have remained at an elevated level. The average mortgage rate is hovering near 7% as the Federal Reserve has hinted that it will hold high interest rates for longer.
Compass is also on a path to profitability. Its net loss was $321 million in 2023, a big improvement from the $601 million it suffered a year earlier. Its annual loss in the trailing twelve months (TTM) was $197 million.
Analysts anticipate that the company’s business became profitable last year. The average earnings per share estimate for the year is $0.05, followed by $0.14 next year.
Most analysts are bullish on the Compass stock price. UBS recently upgraded it from neutral to buy, while Needham, Barclays, Goldman Sachs, and Oppenheimer have a buy rating on the company. The average COMP share price forecast among analysts is $8.25, a few points higher than the current $7.9.
Read more: Compass stock price soared, but a risky chart pattern has formed
Compass stock price forecast
The weekly chart shows that the COMP share price has been in a strong bullish trend in the past few months. It has rebounded after bottoming at $1.91 in 2022 and 2024 and has now soared to $8.
The stock has formed a bullish megaphone cart pattern, a popular continuation sign pattern. It has also soared above the key resistance level at $5.17, its highest point in January last year.
Compass has moved above the 50-week and 25-week Exponential Moving Averages (EMA). Also, the Relative Strength Index (RSI) and the MACD have all pointed upwards. It has crossed the crucial 38.2% Fibonacci Retracement level.
Therefore, the stock will likely continue rising as bulls target the 50% retracement at $12, up by about 50% above the current level.
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