Zillow's One-Stop Strategy Drives Gains In Rentals, Mortgages, Analysts Say

There is upside to the current Street estimates for Zillow Group Inc ZG even in the absence of any improvement in existing home sales through 2026, according to KeyBanc Capital Markets.

The Zillow Group Analyst: Analyst Sergio Segura upgraded the rating for Zillow Group from Sector Weight to Overweight, while keeping the price target at $100.

The Zillow Group Thesis: The company should be able to maintain and even accelerate market share gains as the penetration of its integrated app experience deepens, Segura said in the upgrade note.

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Zillow Group is likely to generate mid-teens growth even in a "historically challenging real estate market," he added.

"We believe Zillow’s enhanced markets strategy is leading to improved conversion," the analyst wrote. "At the same time, Zillow’s position as a one-stop shop for all things real estate is driving strong results in Rentals and Mortgages," he further stated.

"Coupled with high incremental margins and a disciplined investment framework, we believe Zillow is poised for outsized margin expansion," Segura said

The EBITDA estimates for 2024, 2025 and 2026 have been raised from $102.5 million to $120.6 million, from $488.5 million to $506.6 million, and from $661.4 million to $686.7 million, respectively, which are now 3%, 4%, and 7% above Street estimates, he added.

ZG Price Action: Shares of Zillow Group were up 0.3% to $79.51 at the time of publication on Monday.

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