Shares of Matterport (NASDAQ:MTTR) are down more than 5% following a downgrade from acclaimed Wedbush analyst Dan Ives. Ives downgraded MTTR stock from “outperform” to “neutral” and lowered his price target from $10 to $6. The new price target implies upside of about 7% from current prices.
Matterport operates as a spacial data company that focuses on scanning buildings and real estate to provide virtual 3D models. Users can then explore these 3D models as realistic replicas. As of Q4, the company had an annual run-rate of $108 million.
Matterport also has a partnership with online real estate brokerage Redfin (NASDAQ:RDFN). The partnership allows Redfin to use Matterport’s interactive 3D scans on its website.
With that said, let’s jump into the details of the downgrade.
Why Is MTTR Stock Down Today?
Ives stated that the reason for his Matterport downgrade is due to its high exposure to the real estate market. Right now, median sale prices of houses in the U.S. are currently at an all-time high. In addition, 30-year mortgage rates recently hit 5% for the first time since 2011. Because of these two factors, consumers may be hesitant to shop for new housing. As a result, Matterport’s business may be detrimentally affected by the lowered interest in housing.
However, Matterport has a major opportunity to become a dominant player in the metaverse. The company’s 3D scanning technology seems to be a perfect fit for scanning virtual worlds. Despite this opportunity, shares of the company are down more than 70% year-to-date. Matterport has confirmed that it will report Q1 earnings on May 10 after the market close.
With Ives’ downgrade in mind, let’s take a look at how other analysts view the company.
How Do Other Analysts Feel About Matterport?
- Deutsche Bank has a price target of $14. Analyst Bhavin Shah views Matterport as a “leader in digitization of the built world.” Furthermore, Shah believes that digitalization of the world is still in its early innings with massive potential for growth. For revenue, Shah expects a five-year compounded annual growth rate (CAGR) of 52%.
- Morgan Stanley has a price target of $9. Analyst Elizabeth Potter is “encouraged by Matterport’s leadership in a large and under-penetrated opportunity.” However, Potter is concerned about constraints in the camera supply chain, as well as a “tight labor market” in the professional capture services industry. The analyst expects these headwinds to ease in the second half of this year. Additionally, Potter hopes to see Matterport expand into other industries, such as construction and retail.
- Finally, Matterport has an average price target of $12.14 among seven firms with coverage of the stock.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.