Zillow stock reaffirmed at Buy by Benchmark amid housing market challenges

Investing.com - Benchmark maintained its Buy rating and $95.00 price target on Zillow Group (NASDAQ:ZG) following the company’s third-quarter earnings report. The target represents a significant upside from the current price of $70.55, with analyst targets ranging from $66 to $105. According to InvestingPro data, Zillow’s stock has delivered an 18.43% return over the past year despite recent market volatility.

The real estate marketplace delivered solid quarterly results that demonstrated progress despite recent negative headlines and challenging housing market conditions. While the results weren’t exceptional, they showed consistent improvement in key metrics. InvestingPro analysis indicates Zillow’s revenue growth reached 15.31% in the last twelve months, aligning with Benchmark’s positive outlook.

Benchmark highlighted Zillow’s impressive margin expansion, noting that adjusted EBITDA margins have grown from 2.5% in 2021 to approximately 20% currently, despite operating in what the firm called "the worst housing market in 30 years." The research firm projects these margins will reach 27% next year alongside revenue growth of at least 15% through 2026. This outlook is supported by InvestingPro data showing analysts expect Zillow to be profitable this year with an EPS forecast of $1.69, despite not being profitable over the last twelve months.

Zillow CEO Jeremy Wacksman acknowledged the current "loud" environment of criticism and legal challenges facing the company, but Benchmark believes Zillow is already preparing for its next growth phase before reaching its medium-term targets.

The research firm emphasized Zillow’s competitive advantages in consumer traffic and agent products, particularly valuable in an increasingly AI-driven marketplace where data is crucial, making the stock "particularly attractive at current levels." This assessment is reinforced by Zillow’s strong financial position, with a current ratio of 3.34 indicating liquid assets well exceed short-term obligations. The company also holds more cash than debt on its balance sheet, providing financial flexibility to navigate market challenges and invest in growth opportunities.

In other recent news, Zillow Group reported strong third-quarter earnings, with revenue increasing by 16% year-over-year, surpassing analyst expectations. The company achieved revenue of $676 million, exceeding the consensus estimate of $670.1 million. Zillow’s adjusted earnings per share came in at $0.44, slightly above the expected $0.43. The company’s EBITDA for the quarter was $165 million, surpassing both Goldman Sachs’ estimate of $159 million and the consensus expectation of $158 million.

Goldman Sachs responded by raising its price target for Zillow to $78, maintaining a Neutral rating. Cantor Fitzgerald also maintained a Neutral rating with a $74 price target, noting that Zillow’s revenue and EBITDA exceeded prior estimates by 1% and 4%, respectively. Meanwhile, UBS adjusted its price target for Zillow to $92, down from $95, while keeping a Buy rating. UBS revised its fiscal year 2026 estimates, projecting revenue growth of 15.2% year-over-year but reducing EBITDA margin expectations to 26.6% from 28.5%. These developments reflect Zillow’s ability to outperform in a challenging real estate market.

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