Jefferies maintains Buy on Zillow stock, target at $100

On Friday, Jefferies reasserted their confidence in Zillow Group (NASDAQ:ZG) Inc. (NASDAQ:Z), maintaining a Buy rating and a price target of $100.00. The endorsement came after the firm facilitated meetings with Zillow in Europe, which led to several observations about the company’s potential for growth despite a sluggish housing market. Currently trading at $65.03, with a market capitalization of $15.7 billion, InvestingPro analysis suggests the stock is currently overvalued based on its Fair Value calculations.

The analyst identified six key takeaways from the meetings that underpin their positive outlook. First, they noted that Zillow has various mechanisms to drive growth even if the housing market continues to underperform, evidenced by its impressive 15% revenue growth in the last twelve months. Second, the expansion of Zillow’s Showcase could significantly increase market penetration as demand shifts from agents to sellers.

The third point highlighted by Jefferies was the Rentals division of Zillow, which they believe has a clear trajectory to maintain its high growth rate. Additionally, they see a long-term opportunity for Zillow to become a preferred lending partner within the industry.

The fifth observation made by the analyst was the improvement in agent productivity, attributed to the implementation of AI features by Zillow. Lastly, Jefferies pointed out that Zillow’s increased emphasis on GAAP profit could pave the way for the company to be included in the S&P 500 index.

Zillow Group Inc . is a digital real estate company that operates an online platform, providing a wide array of services including buying, selling, renting, financing, and remodeling properties. The company has been actively leveraging technology to enhance its offerings and streamline the real estate transaction process for its users, maintaining a robust 76.4% gross profit margin while delivering a 63% return for investors over the past year.

In other recent news, Zillow Group reported its first-quarter 2025 earnings, showcasing a stronger-than-expected performance with earnings per share (EPS) of $0.41, surpassing the forecasted $0.37. Revenue for the quarter reached $598 million, exceeding the anticipated $587.69 million and marking a 13% increase year-over-year. Despite these positive financial results, Keefe, Bruyette & Woods analyst Ryan Tomasello adjusted Zillow’s price target to $74 from $76, maintaining a Market Perform rating. This revision follows the company’s earnings report and reflects a recalibration of expectations due to less optimistic guidance for second-quarter EBITDA, which is projected to fall 10% below consensus at the midpoint.

Zillow’s Rentals segment demonstrated significant growth, with revenue reaching an all-time high, growing 33% year-over-year. The company’s partnership with Redfin (NASDAQ:RDFN) is anticipated to further enhance its Rentals outlook, projecting a 40% year-over-year increase by 2025. However, the For Sale revenue outlook appears less optimistic, with expected growth of only 6-9% in 2025, below the 10-11% anticipated by analysts. Zillow continues to maintain its consolidated full-year revenue and EBITDA outlook, despite acknowledging increased uncertainty in the housing market.

The company’s strategic focus on enhancing product offerings and expanding market reach contributed to the positive performance. Analysts noted that Zillow’s effective execution of strategic initiatives and market expansion efforts were evident in the earnings beat. Looking ahead, Zillow expects revenue growth in the low to mid-teens for the full year 2025, with continued EBITDA margin expansion and positive GAAP net income.

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