On Thursday, Piper Sandler exhibited confidence in Zillow Group (NASDAQ:ZG) shares, as the firm raised its price target on the company's shares to $73.00, up from the previous target of $62.00.
The firm's decision to increase the price target followed Zillow's third-quarter performance, which surpassed revenue and EBITDA expectations. Alongside the new price target, Piper Sandler maintained an Overweight rating on the real estate database company's stock.
The third-quarter results showed that Zillow's new products are contributing to market share gains, outpacing the overall market growth rate. This success is attributed to improved conversion rates and the introduction of Enhanced Markets, which now number 43.
The company's leadership also appears to be instilling confidence among investors, with the new CEO Rich Wacksman expressing optimism about his role and CFO Allen Parker maintaining control over expenses.
In light of these developments, Piper Sandler adjusted its future earnings expectations for Zillow. The firm increased its forecast for the company's fiscal year 2025 EBITDA by 3%. This revision reflects a positive outlook on Zillow's financial trajectory and operational efficiency, suggesting a strong potential for continued growth.
Zillow's stock price target adjustment by Piper Sandler signals a vote of confidence in the company's strategy and performance. The Overweight rating implies that the firm believes Zillow's shares could outperform the average total return of the stocks in the analyst's coverage universe over the next 12 to 18 months. The new price target of $73.00 represents Piper Sandler's expectation for the stock's potential rise from its previous target.
In other recent news, Zillow Group has been making significant strides in the market. The company's third-quarter earnings report revealed an adjusted earnings per share of $0.35 and a revenue of $581 million, marking a 17% increase year-over-year. This performance was largely driven by a 12% rise in Residential revenue to $405 million and a 24% growth in Rentals revenue to $123 million. Moreover, the Mortgages segment experienced a 63% surge in revenue to $39 million.
Evercore ISI has shown confidence in Zillow, raising its price target for the company to $75 from the previous $55, while maintaining an Outperform rating. The firm acknowledged the success of Zillow's Enhanced Market efforts, now expanded into 43 markets, and the integration of Follow Up Boss, managing 80% of Enhanced Market connections.
The firm also highlighted the growth in Zillow's Rentals segment, boosted by a multifamily advertising campaign and a partnership with Realtor.com.
Looking ahead, Zillow anticipates its fourth-quarter revenue to range between $525 million and $540 million. The company concluded the quarter with $2.2 billion in cash and investments, and reported an average of 233 million monthly unique users on its mobile apps and websites, a 1% increase year-over-year. These are among the recent developments for Zillow Group.
InvestingPro Insights
Piper Sandler's optimistic outlook on Zillow Group (NASDAQ:ZG) is further supported by recent data and insights from InvestingPro. The company's market capitalization stands at $13.42 billion, reflecting its significant presence in the real estate technology sector. Zillow's revenue growth remains robust, with a 17.14% increase in the most recent quarter, aligning with Piper Sandler's observations on market share gains and new product contributions.
InvestingPro Tips highlight that Zillow's management has been aggressively buying back shares, which often signals confidence in the company's future prospects. This aligns with the positive sentiment expressed by the new CEO and CFO mentioned in the article. Moreover
, Zillow holds more cash than debt on its balance sheet, providing financial flexibility to invest in growth initiatives like the Enhanced Markets program.
The company's strong performance is also reflected in its stock price, with InvestingPro data showing a impressive 51.77% total return over the past year. This substantial gain supports Piper Sandler's decision to raise the price target and maintain an Overweight rating.
For investors seeking a deeper understanding of Zillow's financial health and growth potential, InvestingPro offers 8 additional tips, providing a comprehensive analysis to inform investment decisions.
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