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On Wednesday, JMP Securities reiterated its Market Outperform rating on Zillow Group (NASDAQ:ZG) with a steady price target of $92.00. The firm’s analyst, Nicholas Jones, maintained the optimistic stance despite the company’s stock experiencing an approximately 11% decline following the announcement of its fourth-quarter 2024 results. According to InvestingPro data, analyst targets for Zillow range from $64 to $110, with the stock showing significant volatility as indicated by its beta of 2.23. The drop was attributed to a weaker-than-expected outlook for the first quarter of 2025, but Jones believes the market’s reaction may have been excessive.
Zillow’s full-year forecast, which suggests low to mid-teens revenue growth, aligns closely with the consensus estimate of around 15%. The company has demonstrated strong revenue performance, with a 15% growth in the last twelve months and a healthy gross profit margin of 76.4%. Additionally, the company anticipates continued margin expansion. Intra-quarter trading saw Zillow’s shares fall by roughly 17%, a trend thought to be influenced by increased macroeconomic volatility, particularly due to recent tariff announcements by the current administration and their potential downstream effects.
Despite recent market challenges, Zillow’s shares are trading below their two-year average EV/FY2 EBITDA multiple. However, on an EV/FY2 sales basis, the valuation appears more aligned. InvestingPro analysis suggests the stock is slightly overvalued at current levels, though it maintains strong financial health with a current ratio of 2.81 and more cash than debt on its balance sheet. Get access to over 30 additional key metrics and insights with InvestingPro, including exclusive Fair Value calculations and comprehensive financial health scores. JMP Securities sees potential for valuation multiple expansion, citing Zillow’s robust position to weather a volatile and uncertain market while still increasing its share of agent budgets.
Jones also highlighted the company’s growing momentum in its rentals and mortgages divisions as factors that could help balance any fluctuations in its core residential segment. While not profitable in the last twelve months, analysts predict the company will return to profitability this year. Zillow’s dominant market position within the property technology sector is seen as a key advantage, enabling the company to steer through any macroeconomic conditions.
The maintained price target of $92 is based on an estimated EV/2026 adjusted EBITDA multiple of around 25 times. JMP Securities’ continued endorsement reflects confidence in Zillow’s ability to capture market share and sustain growth despite the current economic headwinds.
In other recent news, Zillow Group’s financial performance and strategic initiatives have captured the attention of several analysts. DA Davidson expressed confidence in Zillow Group by raising the company’s price target to $90, following the company’s strong fourth-quarter results that exceeded revenue and EBITDA expectations. Piper Sandler also maintained an Overweight rating with a $90 target, noting a 67% year-over-year increase in fourth-quarter Flex (NASDAQ:FLEX) revenue, which outpaced other segments. RBC Capital Markets reiterated its Outperform rating and $88 price target, emphasizing potential above-market growth due to Zillow’s strategic market enhancements.
Bernstein SocGen Group maintained a Market Perform rating with a $65 target, acknowledging that while Zillow’s Q4 results surpassed forecasts, they did not meet all expectations, highlighting the need for market share gains in Q1. KeyBanc Capital Markets kept an Overweight rating and an $85 target, citing the favorable impact of the National Association of Realtors’ updated Clear Cooperation Policy on Zillow’s access to listings. Each analyst pointed to different aspects of Zillow’s strategy, such as enhanced markets, new products, and partnerships, as drivers for future growth. These developments underscore the varied perspectives on Zillow Group’s current market position and potential trajectory.
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