RBC Capital has maintained its Outperform rating on Zillow Group (NASDAQ: NASDAQ:ZG) with a steady price target of $66.00.
The firm's analysis suggests that the third quarter (Q3) results for Zillow are poised to surpass expectations, with the fourth quarter (Q4) estimates appearing reasonable despite potential volume declines.
The analyst noted mixed feedback from Premier Agent checks, with a solid Q3 performance but a possible slowdown at the start of Q4 due to interest rate concerns and the impending elections.
The analyst highlighted that while year-over-year comparisons show a decline, Federal Housing Administration (FHA) mortgage purchase applications have seen an improvement. This is attributed to easier comparisons from the previous year. Additionally, the recent settlement with the National Association of Realtors (NAR) was perceived more positively than initially anticipated.
Further optimism for Zillow's outlook is provided by recent enhancements to the company's Flex (NASDAQ:FLEX) model, which are expected to improve monetization in certain markets.
Looking ahead, RBC Capital projects that Zillow's strategic market and product cycle rollouts are well-positioned to advance into 2025. The firm anticipates that Zillow's market share gains compared to industry growth will become increasingly evident.
In other recent news, Zillow Group Inc . has been making notable strides in its financial performance. The company's Q2 revenue exceeded market expectations, reaching $572 million, a 13% increase year-over-year. The firm's financial estimates have also been revised upwards, reflecting an optimistic outlook for its future performance.
Zillow's stock was upgraded from Neutral to Outperform by a major financial firm, with the price target increased to $80.00 from $50.00. This adjustment reflects the firm's heightened optimism about Zillow's business prospects, particularly its software and services (S&S) initiatives and core brokerage operations.
Susquehanna, another financial firm, maintained its Neutral rating on Zillow but boosted the shares target to $55.00 from the previous $42.00. The firm revised its revenue, EBITDA, and EPS forecasts for Zillow Group, citing the company's recent results and guidance.
Zillow's Q3 residential revenue is projected to be between $375 million and $385 million, with total Q3 revenue anticipated to fall between $545 million and $560 million. The company's EBITDA for Q3 is expected to be between $95 million and $110 million.
InvestingPro Insights
To complement RBC Capital's optimistic outlook on Zillow Group, recent data from InvestingPro offers additional context. Despite the challenging real estate market conditions, Zillow has demonstrated resilience with a revenue growth of 9.4% over the last twelve months as of Q2 2024, reaching $2.07 billion. This aligns with the analyst's expectation of Zillow potentially surpassing Q3 estimates.
InvestingPro Tips highlight that Zillow "holds more cash than debt on its balance sheet" and "liquid assets exceed short-term obligations," suggesting a strong financial position to weather market fluctuations and invest in growth initiatives like the enhanced Flex model mentioned in the article.
The company's stock performance has been notably strong, with InvestingPro data showing a 61.55% price total return over the past year and a 49.01% return over the last six months. This positive momentum supports RBC Capital's Outperform rating and reflects growing investor confidence in Zillow's strategic direction.
For readers seeking a more comprehensive analysis, InvestingPro offers 9 additional tips for Zillow Group, providing deeper insights into the company's financial health and market position.
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