Re/Max slumps as Morgan Stanley warns of litigation risks, downgrades to "underweight"

Re/Max Holdings

07/11/2023 18:50

** Shares of Re/Max Holdings  RMAX.N  down 9.2% at $9.81
after Morgan Stanley cuts rating of real estate broker to
"underweight" from "equal-weight"
    ** RMAX slumps as much as 13.6% to record low $9.33 on Tues
    ** Brokerage chops PT from $19.50 to Street-low $9, LSEG
data showed
    ** In note late Mon, Morgan Stanley analyst Ronald Kamdem
said NAR (National Association of Realtors) ruling increases
risk of further litigation and costly settlements, which is an
overhang on the stock's multiple
    ** Kandem also pointed to MS housing strategist expecting a
challenging backdrop for activity in 2024
    ** A US jury last week found NAR liable to pay $1.78 bln in
damages for inflating commissions, sending stocks of realtors
lower
    ** Re/Max and Anywhere Real Estate  HOUS.N  had settled
before trial, paying $55 mln and $83.5 mln, respectively,
without admitting liability
    ** Now, 1 of 7 analysts rates RMAX "buy", 5 have "hold" and
Morgan Stanley is lone "sell" recommendation; median PT of $18
down from $21 a month ago - LSEG
    ** With move on Tues, RMAX has shed nearly half its value in
2023
    ** In comparison, shares of online real estate firm Zillow
 ZG.O , which is not a defendant in either of the two
class-action lawsuits, up ~18% YTD and peer Redfin's  RDFN.O 
stock up about 40% this year

 (Lance Tupper is a Reuters market analyst. The views expressed
are his own)
 ((lance.tupper@thomsonreuters.com
lance.tupper@tr.com 1-646-279-6380))