UPDATE: Citigroup Initiates Zillow at Neutral on Current Valuation

In a report published Wednesday, Citigroup analyst Mark May initiated coverage on Zillow Z with a Neutral rating.

In the report, Citigroup noted, “We are bullish on the secular growth outlook for Zillow and its addressable market (online real estate services), on its ability to capture outsized market share of agent marketing spend, and on management's ability to execute. However, the current valuation appears to fully reflect this bullish view. In addition to looking for more attractive entry price, we'd also like to 1) monitor the impact on growth and margins of the recent plan to materially increase marketing spend; 2) see signs that the new pricing model is enabling the incremental revenue opportunity envisioned; and 3) see greater traction with new ancillary products and initiatives, all else equal. As such, we are initiating coverage of Zillow with a Neutral rating.”

Zillow closed on Tuesday at $60.98.