On Monday, Zillow Group (NASDAQ:ZG) received a reaffirmation of confidence from a Citi analyst who maintained a Buy rating and a price target of $58.00 on the company's stock. The endorsement is based on proprietary data indicating a significant increase in Zillow Showcase Listings (ZSLs) for the month of June.
The data, collected in collaboration with Citi's Innovation Lab, showed a monthly jump of 21% in ZSLs, totaling approximately 5,300 listings with about 2,600 incremental listings. The listings were tracked across 44 states and roughly 1,800+ cities. Notably, the penetration rates of ZSLs to total listings reached high single digits in Apollo Beach, FL, and mid-single digits across multiple markets.
For the second quarter, the analyst noted that around 6,800 net new listings were tracked, which at an average price of $500 per listing, suggests a revenue contribution of $3.4 million. Despite the challenges in the real-estate market, the monthly adoption trends of ZSLs appear to be encouraging.
The analyst's outlook for Zillow remains positive, anticipating benefits as the housing market improves and the company's new products gain traction. These products include the expansion of Enhanced Markets, which is expected to grow from 19 to 36 by the end of August, RT Touring available in 120 markets, ZSL, and Rentals, among others. The maintained Buy rating and price target reflect a continued belief in Zillow's potential for growth.
In other recent news, Zillow Group has seen significant developments, with a focus on growth and expansion. The company reported a 13% year-over-year revenue increase, totaling $529 million, surpassing expectations.
Still, Zillow's second-quarter guidance fell short of analyst expectations, attributed to underperformance in first-time homebuyer activity and a cautious stance from Premier Agent partners due to a recent interest rate increase.
Zillow's Listing Showcase feature has been gaining traction, with DA Davidson maintaining a positive outlook, reiterating a Buy rating and a steady price target of $52.00. The company's Flex (NASDAQ:FLEX) program reported a 31% year-over-year increase in revenue for the first quarter of 2024, a growth notably highlighted by Piper Sandler, which reiterated its Overweight rating with a steady price target of $62.00.
Barclays (LON:BARC) reaffirmed its Underweight rating on Zillow Group shares, maintaining a price target of $35.00, while Citi maintained a Buy rating and a $58.00 price target, expressing optimism based on the potential growth from Zillow's latest offerings, including Enhanced Markets, RT Touring, and Showcase Listings.
Zillow has been facing challenges from Homes.com, yet it has maintained its market dominance. The recent settlement of a commission lawsuit with the National Association of Realtors is expected to further emphasize the importance of the Listing Showcase for Zillow in upcoming quarters and years. These are among the recent developments shaping the trajectory of Zillow Group.
InvestingPro Insights
Recent analysis from InvestingPro supports the optimistic view of Zillow Group (NASDAQ:ZG), with the company demonstrating strategic financial maneuvers and positive market performance indicators. The management's aggressive share buybacks are a testament to their confidence in the company's value, aligning with the analyst's maintained Buy rating. Additionally, Zillow's strong cash position, holding more cash than debt, provides a solid foundation for future growth and stability.
InvestingPro Data shows Zillow's market capitalization stands at $11.77 billion, and despite a negative P/E ratio, the company's revenue growth has been positive, with a 6.03% increase over the last twelve months as of Q1 2024. Moreover, the stock has seen a significant return over the last three months, with a 15.28% price total return, indicating a robust short-term performance.
For readers looking to delve deeper into Zillow's financial health and stock performance, there are additional InvestingPro Tips available that highlight the company's expected net income growth this year and insights into the stock's volatility. With these resources, investors can make more informed decisions, especially by using the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription. Find more expert insights on Zillow Group at https://www.investing.com/pro/ZG.
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