Bank CEOs meet with Trump to discuss Fannie Mae and Freddie Mac - Bloomberg
On Thursday, RBC Capital Markets reiterated its Outperform rating on Zillow Group (NASDAQ:ZG) shares, maintaining the $88.00 price target, which sits comfortably within the analyst range of $64 to $110. According to InvestingPro data, the stock appears overvalued at current levels, despite showing strong momentum with a 43% return over the past year. The firm’s analyst, Brad Erickson, provided insights on the company’s growth prospects, emphasizing the potential for Zillow to demonstrate consistent, above-market expansion due to its enhanced market strategies.
Erickson’s analysis is aimed at investors seeking to reconcile Zillow’s market disclosures with the growth expectations set by Wall Street. The company’s revenue growth of 15% in the last twelve months and projected 14% growth for the coming year support these expectations. RBC Capital has developed a model to address this, which Erickson believes may be subject to ongoing refinements. The model has led to a slightly increased confidence in the company’s estimates, assuming market conditions remain constant.
The key factors influencing this outlook include the performance of Zillow’s early markets compared to the rest of the business, and whether new market cohorts can exhibit growth trajectories similar to earlier ones, despite potential differences in underlying drivers.
Erickson’s bottom line suggests that for Zillow’s 2025 Street estimates to be achievable, the latest enhanced market rollouts would need to avoid significantly underperforming compared to the first cohort. This analysis supports the notion that Zillow’s strategic initiatives are likely to meet or exceed current market growth expectations.
In other recent news, Zillow Group’s fourth-quarter performance exceeded expectations, with a notable increase in Flex (NASDAQ:FLEX) revenue by 67% year-over-year, according to Piper Sandler. Despite this success, Zillow’s guidance for the upcoming quarter was more conservative, with revenue growth expected to slow to 11%. DA Davidson and Benchmark analysts expressed confidence in Zillow’s future, with DA Davidson raising its price target to $90 and Benchmark setting a new target of $110, both maintaining a Buy rating. Piper Sandler also adjusted its price target to $90, citing strategic advancements in Zillow’s business segments as a positive factor. Bernstein maintained a Market Perform rating with a $65 target, acknowledging that while Zillow’s results surpassed forecasts, they did not meet some expectations due to a temporary demand surge.
Analysts from Piper Sandler and DA Davidson emphasized Zillow’s strategic initiatives, including the expansion of Enhanced Markets and partnerships like the one with Redfin (NASDAQ:RDFN), as key drivers for future growth. Benchmark highlighted Zillow’s transparency about its goals and potential revenue growth, despite a slower start to the year. The company’s ongoing efforts to broaden its market reach and enhance services like Mortgage, Showcase, and Flex remain focal points for analysts. Despite differing views on price targets, the consensus indicates a positive outlook for Zillow Group’s continued growth and strategic execution.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.