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On Wednesday, Evercore ISI analyst Mark Mahaney increased the price target on Zillow Group (NASDAQ:ZG) to $90 from the previous $75, while maintaining an Outperform rating on the company’s stock. According to InvestingPro data, Zillow is currently trading near its 52-week high of $89.39, with analyst targets ranging from $75 to $93. The adjustment follows Zillow’s fourth-quarter earnings report, which revealed results that surpassed expectations but also included a weaker-than-anticipated guidance for the first quarter.
Zillow’s shares experienced a decline of approximately 7% in after-hours trading. This downturn is attributed to a softer first-quarter forecast, a reflection of the current slowdown in the housing market as indicated by early quarter trends. Despite this, management highlighted several positive developments within the company. InvestingPro analysis shows impressive momentum, with the stock delivering a 69.12% return over the past six months and maintaining strong financial health with a current ratio of 3.13. Notably, Zillow’s Enhanced Market efforts are beginning to yield strong outcomes, now accounting for 21% of total connections on the platform. The company expects this figure to reach 35% by the end of 2025.
The report also mentioned significant progress with Follow Up Boss, a system managing 80% of Enhanced Market connections, along with Showcase listings now appearing on nearly 1.7% of new for-sale listings across the nation. Additionally, Zillow’s Rentals segment is growing robustly, driven by a multifamily advertising campaign and a partnership with Realtor.com.
Mahaney expressed confidence in Zillow’s potential, citing its innovative product cycles, new cost discipline strategies, and the likelihood of benefiting from a future rebound in the real estate market. Supporting this outlook, InvestingPro data reveals revenue growth of 13.12% and analysts forecasting positive earnings of $1.50 per share for FY2024. In conjunction with this optimistic outlook on Zillow, Evercore ISI has decided to remove their Tactical Outperform call. For deeper insights into Zillow’s valuation and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro.
In other recent news, Zillow Group has been the subject of various developments. Bernstein analysts maintained their Market Perform rating on Zillow shares, anticipating a strong fourth-quarter performance, particularly in Residential revenue. They also projected an attractive EBITDA margin and suggested that the company’s growth would require gaining additional market share.
Zillow also saw a significant increase in stock, along with other real estate-related stocks, following the release of the latest inflation data. This data indicated less than expected core inflation in December, easing investor concerns about aggressive interest rate hikes.
Moreover, Zillow announced the appointment of Zuhairah Washington as Senior Vice President of Market Operations and General Manager of Flex (NASDAQ:FLEX). Washington, with her extensive experience at Uber (NYSE:UBER) and Expedia (NASDAQ:EXPE) Group, is expected to enhance Zillow’s integrated housing super app experience.
Lastly, Jefferies maintained a Buy rating on Zillow, increasing the price target to $105 from $92. They cited an anticipated recovery in Housing Transaction (JO:TCPJ) Value, product expansion, and low variable costs as reasons for their positive stance. These recent developments reflect the ongoing progress and strategic moves within Zillow Group.
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