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On Wednesday, Citi analyst Ronald Josey increased the price target for Zillow Group (NASDAQ:ZG) shares to $98.00, up from $95.00, while keeping a Buy rating on the stock. Currently trading at $83.84 with a market capitalization of $20 billion, Zillow appears overvalued according to InvestingPro analysis. The adjustment follows Zillow’s reported revenue growth and successful product initiatives that appear to be enhancing the company’s market position.
Josey noted that despite ongoing challenges in the housing market, Zillow has experienced significant revenue growth in its For Sale and Rentals segments. The company’s overall revenue grew by 13.1% year-over-year to $2.16 billion, maintaining a healthy gross profit margin of 76.4%. Specifically, For Sale revenue grew by 15.4% year-over-year and Rentals revenue saw a 25% increase, with multifamily revenue jumping by 41%. These gains are attributed to Zillow’s product initiatives, which have improved conversion rates and led to market share gains.
The analyst highlighted several of Zillow’s successful features, including RT Touring, which now accounts for one in three connections. Zillow Home Loans (ZHL) adoption is on the rise, and Showcase Listings now represent about 1.7% of all new listings. Josey’s proprietary tracking indicates that Zillow’s Showcase Listings have seen a 75% month-over-month increase.
Furthermore, Josey is optimistic about Zillow’s scaling efforts in Enhanced Markets, which are expected to make up 35% of connections by the end of 2025 and 75% over time. This expansion supports the analyst’s belief that Zillow is on track to meet its goal of achieving a 6% transaction share by the end of 2025.
The partnership between Zillow and Redfin (NASDAQ:RDFN) in the Rentals space is also seen as a positive development. This collaboration is anticipated to broaden Zillow’s audience and listing scale, with revenue growth expected in the second half of 2025 and into 2026.
In light of these product tailwinds and an improving profitability outlook, Josey reaffirmed the Buy rating for Zillow Group and increased the price target to $98.00, signaling confidence in the company’s growth trajectory and market strategy. InvestingPro data reveals that 6 analysts have recently revised their earnings upwards, with analyst targets ranging from $50 to $110. For deeper insights into Zillow’s valuation and growth prospects, including 12+ additional ProTips and comprehensive financial analysis, check out the full Pro Research Report available on InvestingPro.
In other recent news, Zillow Group has been the focus of several key analyst updates. Cantor Fitzgerald has raised Zillow’s price target from $62 to $70, following a fourth-quarter earnings report that exceeded expectations. The company’s revenue and EBITDA surpassed estimates, despite a volatile real estate market. Looking ahead, Zillow anticipates revenue growth in the mid-teens year-over-year for fiscal year 2025, and plans to expand its market coverage and invest in the mortgage sector.
UBS has maintained a Buy rating on Zillow, with a steady price target of $98, noting a slight increase in revenue estimates for fiscal year 2025. Despite a marginal reduction in margin expectations, the firm expresses comfort with the extended period of variable expense deleverage if it translates to multi-year gains in Enhanced Market conversions.
Benchmark has also increased Zillow’s price target to $100, maintaining a Buy rating. The firm cites Zillow’s share price recovery and the company’s ability to manage mid-cycle margins and earnings effectively as reasons for the upgrade. KeyBanc has upgraded Zillow from Sector Weight to Overweight, setting a new price target of $100, based on a detailed segment-by-segment revenue analysis.
Lastly, DA Davidson has maintained a Buy rating on Zillow with an $80 target, following positive U.S. housing industry transaction data for December. The firm believes this data strengthens their positive outlook on Zillow Group’s performance. These recent developments reflect a generally positive outlook for Zillow from several key financial firms.
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