Zillow stock falls as KBW highlights legal overhangs and industry shifts

Investing.com - Zillow (NASDAQ:Z) shares declined on Tuesday as Keefe, Bruyette & Woods maintained its Market Perform rating and $85.00 price target on the real estate marketplace.

The stock fell 5.8% compared to the S&P 500’s 0.4% gain as KBW analyst Ryan Tomasello pointed to mounting legal challenges and industry consolidation affecting Zillow’s business outlook.

A class action lawsuit filed last Friday alleges that Zillow’s Flex business model deceives consumers and helps maintain high, inflexible commissions, adding to the company’s legal concerns.

KBW also highlighted the proposed acquisition of Anywhere by real estate brokerage Compass, which would triple Compass’s market share and potentially threaten Zillow’s business model.

Compass’s off-MLS marketing strategy was specifically identified as a competitive threat to Zillow’s position in the real estate marketplace ecosystem.

In other recent news, Zillow Group Inc. reported its second-quarter 2025 earnings, revealing a slight miss on earnings per share (EPS) but surpassing revenue expectations. The company posted an EPS of $0.40, just below the forecast of $0.42. However, total revenue reached $655 million, exceeding the anticipated $647.7 million, bolstered by strong performance in rentals and mortgages. JPMorgan has responded to these developments by raising its price target on Zillow to $94 from $79, maintaining an Overweight rating on the stock. The firm highlighted that while the second-quarter results were in line with expectations, the third-quarter outlook is solid, with revenue expected to grow 14%-16% year-over-year. These recent developments provide insights into Zillow’s current financial performance and future growth potential.

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