Compass stock price staged a strong comeback on Wednesday after the company boosted its forward guidance. It also jumped as mortgage rates dropped slightly after the latest US inflation data from the United States. The COMP stock was trading at $6.70, its highest swing since December 17 and 32% above the lowest level this month.
Compass boosted its guidance
Compass, one of the biggest real estate brokerage companies, has done well in the past few months even as the industry faced major headwinds. It soared by over 272% from its lowest point in 2023, bringing its market cap to over $2.85 billion.
The biggest challenge the company has faced was a loss in March 2024 when the National Association of Realtors agreed to pay $418 million to resolve antitrust cases. That ruling also forced buyers to enter into written agreements with their agents before viewing properties. It means that many of Compass realtors are now making less money.
Compass stock price rose this week after the company boosted its forward guidance. In a statement, the firm said that its revenue will be between $1.36 billion and $1.39 billion, up from $1.22 billion to $1.35 billion. For the year, the company expects that its revenue will be between $5.6 billion and $5.64 billion.
Analysts are optimistic that the company will continue to perform well in the next few years. They expect its revenue to be $6.56 billion in 2026, up 17.8 percent from 2025.
Compass stock has also jumped as investors anticipate that it will become a highly profitable company. Its annual earnings per share is expected to improve to $0.05 in 2024 from a 28-cent loss a year earlier. It will then make an EPS of 14 cents this year.
The stock also jumped after the US released encouraging inflation data. The Bureau of Labor Statistics (BLS) reported that the core Consumer Price Index (CPI) dropped from 3.3% in November to 3.2% in December.
According to Freddie Mac, the average 30-year and 15-year mortgage rates dropped slightly to 6.9% and 6.14%. These rates are significantly higher than last year’s low of 5.16%. The expectation is that rates may continue falling if inflation continues falling.
Compass stock price forecast
COMP stock chart by TradingView
The daily chart shows that the COMP share price bottomed at $5.10 earlier this month and has bounced back to $6.67. It has retested the lower side of the ascending channel shown in green.
The stock has moved above the 50-day and 100-day Exponential Moving Averages (EMA). It has moved above the 23.6% Fibonacci Retracement level at $6.32. The Relative Strength Index (RSI) has moved above the neutral point at 50.
The risk, however, is that the Compass stock price has formed a head and shoulders chart pattern, a popular bearish reversal point. If this happens, the next point to watch will be at $5.10, the lowest swing this month. A drop below that level will push it to the 50% retracement point at $4.78. This view will become valid if the stock rises above last year’s high of $7.60.
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