On Thursday, Evercore ISI demonstrated confidence in Zillow Group (NASDAQ:ZG), with a significant increase in the company's price target, raising it to $75 from the previous $55. The firm maintained its Outperform rating on the stock, following Zillow's third-quarter earnings surpassing expectations.
The update comes after Zillow's shares experienced a roughly 15% surge in after-market trading, buoyed by third-quarter results that exceeded analysts' projections despite a sluggish housing market. The performance was particularly highlighted by the company's Residential Revenue, which surpassed industry benchmarks by approximately 10 percentage points.
Evercore ISI noted the success of Zillow's Enhanced Market efforts, which have now expanded into 43 markets, surpassing the year-end goal of 40 markets. Additionally, the integration of Follow Up Boss, which now manages 80% of Enhanced Market connections, and the inclusion of Showcase listings on nearly 1.5% of new for-sale listings nationwide, were recognized as positive developments.
The firm also pointed to strong growth in Zillow's Rentals segment, propelled by its multifamily advertising campaign and a partnership with Realtor.com.
The firm's analyst commented on the company's trajectory, stating that Zillow continues to demonstrate promising potential through its new product cycles and improved cost discipline. The analyst also expressed optimism about Zillow's ability to capitalize on the eventual recovery of the real estate market.
In other recent news, Zillow Group, Inc. reported robust third-quarter results, surpassing analyst expectations with adjusted earnings per share of $0.35 and revenue of $581 million, a 17% increase year-over-year.
This performance was fueled by growth across all business segments, including a 12% rise in Residential revenue to $405 million and a 24% surge in Rentals revenue to $123 million. The Mortgages segment also experienced significant growth, with revenue soaring 63% to $39 million.
Looking ahead, Zillow anticipates fourth-quarter revenue to land between $525 million and $540 million. The company wrapped up the quarter with $2.2 billion in cash and investments and reported an average of 233 million monthly unique users on its mobile apps and websites, a 1% increase year-over-year.
These are among the recent developments for the real estate technology company.
InvestingPro Insights
Zillow Group's recent performance and Evercore ISI's optimistic outlook are further supported by real-time data from InvestingPro. The company's market cap stands at $13.42 billion, reflecting its significant presence in the real estate technology sector. Notably, Zillow has shown impressive revenue growth, with a 17.14% increase in quarterly revenue as of Q3 2024, aligning with the strong performance mentioned in the article.
InvestingPro Tips highlight that Zillow's stock price has seen a "high return over the last year" and a "strong return over the last three months," with data showing a remarkable 51.77% one-year price total return. This performance underscores the market's positive reaction to Zillow's strategic initiatives and product expansions discussed in the article.
Additionally, an InvestingPro Tip indicates that "analysts predict the company will be profitable this year," which complements Evercore ISI's optimistic stance on Zillow's future prospects. For investors seeking a deeper understanding of Zillow's financial health and market position, InvestingPro offers 7 additional tips not covered here.
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