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Thursday, Benchmark analyst Daniel Kurnos adjusted the price target for Zillow Group (NASDAQ:ZG) to $95.00 from the previous $110.00, while still endorsing the stock with a Buy rating. Following the release of Zillow’s first-quarter earnings for 2025, which exceeded expectations, and a second-quarter forecast that did not meet analyst projections, the company’s shares dipped approximately 5% in after-hours trading. According to InvestingPro data, Zillow’s stock has shown significant volatility, with a 61% return over the past year despite recent pressure. The current analyst consensus suggests moderate upside potential, with price targets ranging from $60 to $110.
Kurnos noted that Zillow’s unchanged full-year guidance amidst a challenging economic landscape is particularly noteworthy. The company’s rental segment is performing beyond expectations, projecting a 40% growth, whereas the residential revenue, especially from Premier Agent within residential, is anticipated to fall slightly short. The analyst suggests that the current market sentiment is gradually shifting from confidence in Zillow’s potential for mid-cycle earnings to skepticism about its ability to secure a dominant position in a consolidating market. InvestingPro analysis reveals strong fundamentals, with the company maintaining a healthy current ratio of 2.81 and holding more cash than debt on its balance sheet. Get access to 8 more exclusive InvestingPro Tips and comprehensive financial metrics to make informed investment decisions.
Despite the competition that may affect profit margins, Kurnos highlighted two key points in Zillow’s favor. First, the company’s significant technological edge, which translates into a lasting data advantage on both the buying and selling sides of the market. Second, the full benefits of enhanced market connections, which are expected to scale over 12 months, are not yet fully realized by Zillow. Presently, the company is benefiting from just a low-double-digit percentage of these connections.
The analyst remains optimistic about Zillow’s future, stating that the current perspective may differ greatly from the narrative 12 months from now. A robust buyback program is expected to support the stock price until the company’s growth and profit margins see a substantial increase.
In other recent news, Zillow Group’s first-quarter results revealed a 2% revenue beat and a 10% EBITDA beat compared to Wall Street’s expectations. The Residential segment saw a 6% year-over-year increase, with both Rentals and Mortgages segments experiencing over 30% growth. Despite this strong performance, Zillow’s guidance for the second quarter of 2025 was slightly below analyst expectations, with revenue and EBITDA forecasts falling short by 1% and 10% at the midpoint, respectively. Cantor Fitzgerald maintained a Neutral rating on Zillow with a $60 price target, noting the impact of real estate market volatility on the company’s growth prospects.
Piper Sandler, however, increased its price target to $82 and retained an Overweight rating, citing Zillow’s effective cost control and execution on product initiatives. KeyBanc also maintained an Overweight rating with an $85 price target, expressing confidence in Zillow’s strategic investments and operational efficiency. JMP Securities reiterated a Market Outperform rating with a $92 target, highlighting Zillow’s potential for valuation multiple expansion and its strong position in the property technology sector.
KeyBanc further commented on the impact of the National Association of Realtors’ updated Clear Cooperation Policy, which is seen as favorable for Zillow. The policy’s retention allows Zillow to continue accessing private listings, maintaining its competitive advantage. These developments underscore the mixed outlook among analysts, with varying price targets and ratings reflecting different perspectives on Zillow’s future performance amidst economic uncertainties.
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