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Investing.com - RBC Capital has reiterated its Outperform rating and $95.00 price target on Zillow Group (NASDAQ:ZG) following meetings with company executives last week. The stock, currently trading at $84.78, sits near its 52-week high of $86.58, having delivered an impressive 64.53% return over the past year.
The investment firm met with Zillow’s VP of Strategic Affairs and IR, Brad Berning, to discuss the company’s position in the housing market and its Enhanced market products including Mortgage and Rentals offerings. With a market capitalization of $21.12 billion and strong liquidity position evidenced by a current ratio of 3.34, Zillow maintains a solid financial foundation.
RBC highlighted that AI search poses minimal risk to Zillow due to "uniquely inaccessible real estate data," while the company is actively pursuing large language model partnerships to strengthen its technological position.
The firm noted Zillow’s title and escrow testing is underway, with some growth expected next year and more significant contribution in 2027, potentially adding over 10% to revenue per transaction capture opportunity.
RBC remains bullish on Zillow’s ability to outgrow both the residential and rental markets while achieving margin leverage, positive GAAP net income, and increasing capital returns against lower stock-based compensation.
In other recent news, Zillow Group has announced the termination of certain capped call transactions initially set up in 2019, related to its Convertible Senior Notes. This move will result in Zillow receiving 3.1 million shares of its Class C stock and $38.2 million in cash, ultimately reducing the number of outstanding Class C shares. Additionally, Zillow has partnered with Berkshire Hathaway HomeServices to provide U.S. agents access to Zillow Showcase, an AI-driven premium listing tool, which reportedly increases the likelihood of listings going pending in the first 14 days and selling for 2% more than non-Showcase listings.
Analyst activity around Zillow has been notable, with Piper Sandler reiterating an Overweight rating, citing strong Flex revenue growth, and increasing the stock price target to $94 due to better-than-expected second-quarter revenue and EBITDA results. Benchmark also maintained a Buy rating, emphasizing Zillow’s focus on new construction as a key area of growth. These developments highlight Zillow’s strategic initiatives and financial adjustments in the evolving real estate market.
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