Wall Street Underestimates Zillow's Potential
JMP Securities Upgrades Zillow to Market Outperform
In a recent report, analysts at JMP Securities raised their rating on the homebuying app Zillow to Market Outperform from Market Perform. The team also increased their revenue forecast and set a target stock price of $60.
- Shares of Zillow surged by 2.7% to $45.02 during morning trading.
- Year-to-date, Zillow stock has witnessed a remarkable gain of 44%, outperforming the S&P 500's 21% rise.
Positive Outlook for Zillow's Future Growth
JMP Securities expressed their belief that Wall Street's consensus estimates for Zillow's future performance are considerably low. The analysts anticipate heightened demand and a potential decrease in interest rates by the second half of 2024.
"We firmly believe that Zillow's growth and profitability will surpass current forecasts, driving a favorable impact on the stock price through multiple expansion," stated JMP Securities.
While acknowledging that recent antitrust litigation headlines in the real estate industry may introduce near-term volatility, the analysts remain confident in Zillow's ability to withstand market fluctuations.
Title: Legal Battles Shake Real Estate Industry and Impact Stocks
A recent jury decision in the Western District court of Missouri has sent shockwaves through the real estate industry, implicating the National Association of Realtors (NAR), major brokerages, and affiliates in a conspiracy. The jury found that these entities conspired to enforce a NAR rule regarding brokers' commissions, resulting in sellers paying higher prices for brokerage services. Unsurprisingly, this ruling negatively impacted stocks related to real estate sales, with even industry giant Zillow taking a hit.
In a separate legal battle that commenced over two years ago, Zillow was sued by Real Estate Exchange (REX), a real estate broker. REX claimed that Zillow made it challenging for consumers to find their listings on its website. Despite initially ruling against REX, a judge recently granted the company a new trial. The grounds for this retrial were based on REX's argument that the judge had not adequately instructed the jury and that certain evidence had been unjustly excluded. Zillow, however, maintained that the previous ruling had already been in its favor.
The outcome of these legal battles remains uncertain. Nevertheless, industry experts view Zillow as a stable entity, considering its widespread brand presence within the real estate sector.
Zillow Analysts Grow More Optimistic
In recent months, analysts have shown a growing level of optimism towards Zillow. According to FactSet, the percentage of analysts who rate the stock as a Buy has increased to 55% from the previous figure of 39% in June. This indicates a positive trend in the market perception of Zillow's performance.
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