Zillow Group shares could jump more than 40% from here, according to Evercore ISI. Analyst Mark Mahaney upgraded the stock to outperform relative to the line and nearly doubled its price target, saying investors should buy Zillow ahead of what could be a “rapid recovery” in the housing market. “We are largely making a macro call here – whether the housing market is already starting to recover or will very soon,” Mahaney wrote in a Sunday note. “But what shields that risk – or better, allows for more than just a rally in cyclical fundamentals and stocks – is a) the ongoing secular migration of residential real estate to online channels; b) a significant TAM of $10 billion and a relatively low 10% market share of Zillow based on our previously published analysis (here); c) a business model that has proven its ability to maintain remarkably high EBITDA margins of 40 % and above; and d) a company that has created an option for itself through both product development and acquisitions,” Mahaney added. ZG YTD mountain Zillow shares YTD Zillow shares have jumped 35% so far in 2023. The stock has performed dismal for most of the pandemic following dramatic moves in the housing market.The stock has fallen more than 49% in 2022 and more than 54% in 2021. However, the price target of $61 The analyst’s reading, up $34, suggests the stock may rise another 44% from Friday’s close at $42.22. Shares in the online real estate market were up about 5% in Monday’s premarket trading. Mahaney expects home prices may fall in the first quarter, based on work by Evercore ISI analyst Steven Kim. That would bolster shares of Zillow, which accounts for more than half of all real estate-related traffic online, Evercore found after analyzing web and third-party app data. “As the leading online real estate information/marketing platform for consumers and real estate agents, we believe Zillow should fully participate in the recovery of the real estate market,” Manahey wrote. — CNBC’s Michael Bloom contributed to this report.
