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Investing.com - Benchmark has reiterated its Buy rating and $95.00 price target on Zillow Group (NASDAQ:ZG), representing significant upside from the current price of $70.55, as the real estate platform navigates multiple legal challenges. According to InvestingPro data, the stock has shown notable volatility, trading between $55.08 and $90.22 over the past 52 weeks.
The company faces lawsuits from competitors Compass and CoStar, along with an FTC antitrust case targeting Zillow’s rentals agreement with Redfin. Despite these challenges, Benchmark believes Zillow "has the edge in most, if not all of the lawsuits" while acknowledging legal outcomes remain uncertain. The company maintains a strong financial position, with InvestingPro analysis showing more cash than debt on its balance sheet and a healthy current ratio of 3.34.
Benchmark’s analysis suggests these legal battles are unlikely to "truly impair Zillow’s business model," though debates around private listings will continue to be a central issue. The firm also notes the extended timeline for these legal proceedings, including antitrust review of Compass’s acquisition of Anywhere.
Market conditions have created additional headwinds, with some reversal in housing market optimism despite Federal Reserve rate cuts. This shift followed a more positive period from April through September when Zillow benefited from signs of improvement in the housing and mortgage markets. Despite challenges, the company has maintained impressive revenue growth of 15.3% and a robust gross margin of 75.8%.
Benchmark recommends buying Zillow shares "on the recent dip," citing internal checks suggesting Zillow’s transaction share strategy is accelerating, with the company scheduled to report earnings on October 30. Analysts tracked by InvestingPro expect the company to return to profitability this year, with earnings forecasts showing significant improvement. Get access to 8 more exclusive ProTips and comprehensive financial analysis in the Pro Research Report, available with an InvestingPro subscription.
In other recent news, Zillow Group is facing significant legal challenges as the Federal Trade Commission (FTC) has filed a lawsuit against the company over its $100 million rental market deal with Redfin. The FTC alleges that Zillow’s agreement aimed to remove Redfin as a competitor in the internet listing services advertising market for multifamily rental properties. Despite these legal hurdles, DA Davidson has maintained its Buy rating on Zillow, setting a price target of $95.00, while acknowledging the antitrust concerns.
Mizuho has initiated coverage on Zillow with an Outperform rating and a $100 price target, emphasizing the company’s resilience in the challenging housing market. JMP Securities also reiterated its Market Outperform rating with a target of $87.00, suggesting the recent decline in Zillow’s stock presents a buying opportunity. Additionally, Bernstein has maintained its Outperform rating and $105.00 price target, noting that the lawsuit may not significantly impact Zillow’s business at this stage. These developments highlight the ongoing interest and varied perspectives from analysts regarding Zillow’s future amid its current legal situation.
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