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Investing.com - Piper Sandler has reiterated an Overweight rating and $94.00 price target on Zillow Group (NASDAQ:ZG) stock, which currently trades at $80.80 and near its 52-week high of $86.58. According to InvestingPro data, the stock has delivered an impressive 50.63% return over the past year, highlighting the company’s Flex (NASDAQ:FLEX) revenue growth and strategic initiatives.
According to Piper Sandler’s analysis, Zillow’s second-quarter Flex revenue grew 44% year-over-year, outpacing the core MBP growth of 12%, though this marked a deceleration for the second consecutive quarter. The firm noted that total reported contract asset growth remained elevated at 50% year-over-year. InvestingPro data shows overall revenue growth of 15.31% in the last twelve months, with the company maintaining a healthy current ratio of 3.34.
Piper Sandler expressed a constructive outlook on Zillow based on three key factors: Premier Agent share gains driven by Flex, new products and optionality, and an expected improvement in the macro housing environment.
The research firm highlighted that Zillow is executing on product initiatives, reducing debt, and repurchasing stock, with a goal of achieving GAAP net income profitability by year-end. Rentals were identified as a particularly strong segment for the company.
Piper Sandler also mentioned it had updated its methodology to exclude the non-Flex portion of the contract asset, including Rentals and other segments, in its analysis of the company.
In other recent news, Zillow Group reported second-quarter revenue of $655 million, surpassing analyst expectations of $647.65 million and demonstrating a 15% year-over-year growth. Despite this revenue success, the company’s adjusted earnings per share were $0.40, slightly below the consensus estimate of $0.42. The adjusted EBITDA was $155 million with a 24% margin, aligning with the higher end of Zillow’s outlook range. Evercore ISI responded by raising its price target for Zillow to $95, maintaining an Outperform rating, while Piper Sandler increased its target to $94, citing strong execution amid a housing slump. Cantor Fitzgerald also adjusted its price target to $74, maintaining a Neutral rating, following Zillow’s strong Q2 performance. Benchmark kept its Buy rating, emphasizing Zillow’s renewed focus on new construction as a significant market segment. These developments reflect Zillow’s ability to exceed expectations and adapt to market conditions, as noted by various analysts.
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