CoStar: Reducing Uncertainty Rating to Medium Due to Encouraging Progress in Residential Business

We are reducing the Morningstar Uncertainty Rating for wide-moat-rated CoStar Group to Medium from High as we become more confident in the outlook of the residential business. CoStar has built industry-leading positions in its various business lines, and we believe that the updated Uncertainty Rating better reflects its risk profile and competitive positioning within the industry. The company is showing good progress in its residential initiative. We increasingly believe that the residential investments are strategically sound and that the company’s differentiated approach to monetizing its residential platform will be helpful in competing with the established players in the industry. We are maintaining our $76 per share fair value estimate for the firm.