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On Thursday, Bernstein SocGen Group maintained its Market Perform rating and $65.00 price target for Zillow Group (NASDAQ:ZG), which currently trades at $74.87. According to InvestingPro data, the stock has seen a significant 45.55% gain over the past six months, despite a recent 10.94% decline in the past week. Analyst Nikhil Devnani acknowledged that Zillow’s Q4 results surpassed sell-side forecasts, but did not deliver the robust performance he had expected. The Residential business lagged behind the overall industry transaction value, which Devnani attributed to a temporary surge in demand as interest rates briefly fell. He emphasized the importance of Zillow returning to normal business operations and market share gains in Q1, given the rising expectations for the stock. The company has shown strong revenue growth of 14.96% in the last twelve months, according to InvestingPro data, which reports 8 additional key insights about Zillow’s performance.
Zillow’s guidance fell short of analyst expectations, but the company is known for its conservative forecasts. Devnani pointed to a sluggish January as a key reason for the cautious outlook. He also noted Zillow’s broader strategic goals for the year, which include expanding Enhanced Markets to reach over 35% of connections, up from the current 21%, and focusing on growth in Mortgage, Showcase, and Flex (NASDAQ:FLEX) services.
Zillow’s fourth quarter performance was sufficient to outdo analyst projections, yet it did not match the stronger results anticipated by some. The transaction value in the industry surpassed that of Zillow’s Residential business. Devnani suggested that the discrepancy in year-over-year growth rates could be explained by the ephemeral nature of the demand increase observed during the quarter, which occurred as interest rates momentarily declined.
Despite the lighter guidance for the upcoming quarter, Zillow’s history of conservative outlooks suggests the potential for outperformance. The company’s strategy for the year aims to broaden its reach and deepen its market penetration. Zillow plans to enhance its Enhanced Markets program, aiming to increase connections significantly, as well as to intensify efforts in its Mortgage, Showcase, and Flex offerings.
In summary, Bernstein SocGen Group has reiterated its Market Perform rating and $65.00 price target for Zillow Group, with an expectation for the company to focus on strategic growth and market share gains in the coming year. The analyst highlighted the need for Zillow to meet growing stock expectations and outlined the company’s strategic plans for expansion and service enhancement. InvestingPro analysis indicates that while Zillow holds more cash than debt on its balance sheet, the company was not profitable over the last twelve months. However, analysts predict profitability this year, with an EPS forecast of $1.90 for FY2025. For deeper insights into Zillow’s financial health and growth prospects, including exclusive Fair Value calculations and comprehensive analysis, check out the full Pro Research Report available on InvestingPro.
In other recent news, Zillow Group has been the focus of several analyst notes following the release of its Q4 2024 results. DA Davidson analyst Tom White increased Zillow’s price target to $90, maintaining a Buy rating, in response to the company’s strong Q4 performance, which surpassed revenue and EBITDA expectations. Concurrently, Benchmark analyst Daniel Kurnos raised Zillow’s price target to $110, emphasizing the company’s strong Q4 results and the potential impact of a new partnership with Redfin (NASDAQ:RDFN).
On the other hand, Piper Sandler reduced its price target for Zillow to $90 but maintained an Overweight rating, citing the company’s conservative revenue growth expectations for the start of the year. BofA Securities analyst Nat Schindler increased the price target on Zillow shares to $84 from $81, following the company’s Q4 earnings that slightly exceeded Wall Street’s expectations. Lastly, KeyBanc Capital Markets adjusted its price target for Zillow, reducing it to $95 from $100, despite expressing confidence in Zillow’s strategic positioning for 2025.
These recent developments underscore the interest in Zillow Group’s performance and strategic initiatives, with analysts from different firms providing varied outlooks. Despite some cautious revenue growth expectations, the overall sentiment remains positive, highlighting Zillow’s potential for sustained growth and profitability.
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