We talked this week with Michael Fox, JPMorgan’s Senior Equity Research Anaylst for the business services sector. He covers the commerical real estate services space, and told a little about this mostly fragmented sector. He did have high praise for a few companies, and one of those was CB Richard Ellis (CBG).
TWST: Give us a quick overview of why you like CB Richard Ellis. What’s the story? Where are their growth opportunities?
Mr. Fox: CB Richard Ellis has built a well-diversified platform largely from the brokerage business and about two-thirds of its revenues or slightly more than that come from the Americas. I think the biggest opportunities for the company are in Europe and Asia, where it has very strong footprints and it should continue to gain market share. The other major opportunity is growing its global outsourcing business that it bolstered with the Trammell Crow acquisition. It now has relationships with 85% of the Fortune 100. This is a great opportunity because Trammell Crow built those relationships in the United States and now with the global platform of the combined company, these relationships can grow on a global basis. That’s going to be a tremendous revenue growth opportunity over the next few years. In addition, the revenue from outsourcing is much more stable than the transactions business. It’s the type of business that once you win it, you usually have it for a long time and it’s not cyclical. It also leads to a lot of transactions business.
For the full interview with Mr. Fox- including a complete overview of the commerical real estate services sector, and more stock picks, click here.
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