The digital revolution is a disrupting force for many industries. Opendoor (OPEN) is applying this opportunity to the residential real estate sector. Going by the company’s latest quarterly results, it’s a plan that is working out just fine.

In Q2, Opendoor generated revenue of $1.2 billion, amounting to a 59% sequential improvement and up by 60% from the same period last year. The figure also came in ahead of the estimates by $110 million and above guidance which called for revenue between $1.025 billion and $1.075 billion. There was a beat on the bottom-line too, with GAAP EPS of -$0.24, $0.10 better off than the Street’s forecast.

The company sold 3,481 homes, a 41% increase on the prior quarter, and bought 8,494, up by 136% sequentially. With 12 new market launches, the company’s footprint expanded to 39 markets by the end of Q2, which Opendoor saw out with an inventory balance of $2.7 billion, up 224% from Q121.

The outlook looks strong too. Opendoor guided for Q3 revenue between $1.8 billion and $1.9 billion. Consensus had $1.62 billion.

Oppenheimer’s Jason Helfstein says the quarter’s results and guidance “validate OPEN's dominant position in iBuyer.”

“OPEN realized record seller conversion in 2Q, while accelerating inventory purchases into 3Q, as consumers increasingly understand the value proposition,” the 5-star analyst said. “While unit economics are receiving temporary benefits from home price appreciation, mgmt. cited 200bps y/y structural margin improvement, as OPEN reached EBITDA profitability and guided to positive EBITDA in 3Q. 2H revenue run-rate expected to reach initial 2023 forecasts, as organic iBuyer demand and buy-box expansion put OPEN well ahead of original growth expectation.”

Opendoor went public via a SPAC merger in December, and the stock has taken a hammering this year. However, Helfstein thinks the shares are now seriously undervalued. The analyst rates OPEN an Outperform (i.e., Buy) and has a $25 price target, indicating upside of 72% from current levels. (To watch Helfstein’s track record, click here)

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Street analysts are split down the middle on this one; based on 2 Buys and Holds, each, the stock has a Moderate Buy consensus rating. However, going by the average price target, the bulls are in control; at $28, the figure suggests 12-month gains of a strong 93%. (See Opendoor stock analysis on TipRanks)

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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

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