DA Davidson has adjusted its price target for Zillow Group (ZG), reducing it to $85 from the previous $90 following a slightly underwhelming Q2 forecast. Despite this, the Buy rating on the stock remains unchanged. According to analyst Tom White, the company delivered robust Q1 results with positive revenue performance across various segments and effective control over operating expenses. Furthermore, the adjusted EBITDA was notably higher than market expectations, underscoring the firm's strong financial position.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 21 analysts, the average target price for Zillow Group Inc (Z, Financial) is $81.29 with a high estimate of $100.00 and a low estimate of $60.00. The average target implies an upside of 19.71% from the current price of $67.90. More detailed estimate data can be found on the Zillow Group Inc (Z) Forecast page.
Based on the consensus recommendation from 26 brokerage firms, Zillow Group Inc's (Z, Financial) average brokerage recommendation is currently 2.4, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Zillow Group Inc (Z, Financial) in one year is $62.90, suggesting a downside of 7.36% from the current price of $67.9. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Zillow Group Inc (Z) Summary page.
Z Key Business Developments
Release Date: May 07, 2025
- Total Revenue: $598 million, up 13% year-over-year.
- For-Sale Revenue: $458 million, up 8% year-over-year.
- Residential Revenue: $417 million, up 6% year-over-year.
- Mortgages Revenue: $41 million, up 32% year-over-year.
- Rentals Revenue: $129 million, up 33% year-over-year.
- Adjusted EBITDA: $153 million, with a margin of 26%, up 200 basis points year-over-year.
- GAAP Net Income: $8 million, representing 1% of revenue.
- Cash and Investments: $1.6 billion at the end of Q1.
- Convertible Debt: $419 million outstanding, expected to settle before the end of Q2.
- Multifamily Properties: 55,000 at the end of Q1, up 38% year-over-year.
- Share Repurchases: $250 million in Q1, with an additional $1 billion authorization approved.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Zillow Group Inc (Z, Financial) exceeded its Q1 2025 outlook, achieving strong top-line growth and GAAP profitability.
- The company reported a 13% year-over-year increase in total revenue, reaching $598 million, with significant growth in rentals and mortgages revenue.
- Zillow Group Inc (Z) expanded its EBITDA margin by 200 basis points year-over-year to 26%, demonstrating effective cost management.
- The company continues to lead in the residential real estate market with 227 million average monthly unique users and 4x the app engagement of the next competitor.
- Zillow Group Inc (Z) is successfully executing its housing super app strategy, integrating services like Premier Agent and Zillow Home Loans to enhance customer experience and drive growth.
Negative Points
- The high-end housing market outperformed, contributing to growth, while the middle and lower end remained flat, posing challenges for broader market performance.
- The macroeconomic environment remains uncertain, with the housing market expected to continue bouncing along the bottom.
- Zillow Group Inc (Z) faces challenges in expanding its Enhanced Markets, requiring methodical rollout and integration with Zillow Home Loans and Premier Agent partners.
- The company anticipates increased expenses in Q2 2025, driven by seasonal marketing and costs associated with the Redfin rentals partnership.
- Despite strong growth in rentals, the overall housing market remains constrained by affordability challenges and limited inventory, impacting transaction volumes.
